Lamb prices: Processors to struggle with short weeks approaching

Already-struggling lamb processors are set to be hit with shortened weeks, and prices are down because of it.

Three short kill weeks in a row are expected to wreak havoc on lamb prices already struggling under limited processing capacity.

All national lamb indicators dipped at the start of this week, with heavy lambs down 21c/kg to 755c/kg carcass weight and trade lambs back 18c/kg to 771c/kg be the cheapest in 12 months.

The combination of three shortened kill weeks due to Easter and ANZAC Day, combined with Covid-19 reduced capacities in abattoirs, are working against a more ordered flow of lambs into the market.

Meat and Livestock Australia’s market information analyst Ripley Atkinson said all lamb categories were impacted by the current market conditions, with “lower demand driving softer prices”.

“Current market conditions for trade lambs demonstrate reduced buyer demand as labour issues through absenteeism (Covid-19 isolation protocols) and the lack of available labour supply impacts throughput capacity,” Mr Atkinson said.

“This is an issue impacting a wide-ranging group of processors — across both the east coast and increasingly in Western Australia.”

Mecardo analyst Angus Brown said a lack of kill space earlier on in the year (reflected in low kill numbers) had caused a glut of heavier lambs in the market place now.

“People had feed around, and prices weren’t great, so they held those lambs and now with shorter kill weeks, it is all coming to a head,” Mr Brown said.

“We feel like these numbers will wash through during April and May and while forward prices won’t be 900c/kg, we have seen contracts for more than 800c/kg.”

Riverina Livestock Agents director James Tierney from Wagga Wagga, NSW, said reports of processors operating as low as 60-70 per cent of capacity combined with bigger numbers of lambs held over summer were pushing down lamb values.

“I do feel like lamb values will increase later on, but it could be a while away yet,” Mr Tierney said.

“The market can get better, and it is easy to get bogged down in what is happening now, but the positive thing is we know the job (exports) is good at the other end.”

Mr Tierney said contracts offered for more than 800c/kg carcass weight for winter delivery were now filled, but others could emerge.

“I think we need to accept that 800c/kg is what 900c/kg was last season — I don’t think we will get to the levels we saw last year because there are just more lambs around,” he said.