Lamb prices to see pressure from labour shortage, high overall numbers

The low lamb slaughter rate and ever-present pressure from a lack of workers could lead to a flooded market mid-year.

A bottleneck of numbers could see winter lamb prices come under pressure as processors continue to be hamstrung by a lack of workers.

The lower lamb slaughter rate for the first three months of the year is expected to boost turn-off from now on, impacting prices.

Slaughter figures from Meat and Livestock Australia show 3.73 million lambs have been processed this year, compared with 4.11 million last year and 4.42 million in 2020.

This is despite an increase in the national flock, from 64 million in 2020 to a projected 73.3 million this year.

Meat and Livestock Australia market information manager Stephen Bignell said there had been an uptick in processing capacity in the past few weeks but overall year to date slaughter numbers were down.

“It is lucky the season has allowed producers to hold over lambs while processing was held up, but we are now expecting an increase in throughput (in abattoirs),” Mr Bignell said.

Analysis from ANZ Agribusiness showed prime lamb yardings this year had fallen with unstable prices encouraging producers to hold onto lambs longer.

“The strong season means there is likely to be a significant backlog of heavier lambs ready to hit the market in the coming months, which may put some downward pressure on prices,” the analysis said.

Lamb prices rose for some weights on Monday, but all are tracking well below year ago levels.

The national restocker lamb indicator was the only one to finish above 800c/kg on Monday, closing at 834c/kg carcass weight.

Elders Corowa auctioneer Steve Grantham said prices were holding well given the challenges the industry was facing.

“We are hearing from processors that they got to a peak of 80 per cent processing capacity but in the past few weeks that has slipped back,” Mr Grantham said.

“We had one of the big two supermarkets buying at Corowa (on Monday) but not the other, but it was the reverse last week.

“I think the market is going OK given everything, but you would have to think there is a backlog of lambs that are yet to come onto the market — we know there are a fair few lambs out there.”

Mr Grantham said there may not be winter price peaks this year but “if we can stay at the levels we are now, we are all going OK”.

“I think we need to come to terms with the fact that prices just might not get better in June and July,” he said.