Light lamb and sheep prices up, heavy lambs down

The latest lamb slaughter versus saleyard supply highlights the shift to direct selling of lambs, which could be keeping a cap on auction price movements.

The ‘tells’ to come out of livestock markets this week were the influence of lambs being sold direct to processors, and it is not a level playing field across the country in terms of season and rainfall.

These factors showed up in the mixed bag of price results for lambs, sheep and cattle at saleyards on Monday following last week’s rain.

It was light sheep and lambs which recorded the best gains in the southern sheepmeat market, these grades of stock not forward sold to processors as much and export shipments suggesting strong demand for this product out of the Middle East.

Light mutton stepped-up in price at Bendigo with ewes in the 18-24kg carcass range averaging $86 a head as the cost to processors went above 360c/kg carcass weight.

Agents advise at least two Victorian based meatworks have quickly followed up and had similar money on the table by Monday night for light sheep delivered direct, marking a significant improvement on the sub $3/kg price which was in play just a week ago.

Light mutton and lambs were in demand this week. Picture: Chloe Smith.

However there wasn’t a lot of improvement for trade and heavy lambs on Monday, suggesting key processors and the supermarkets have their supply position fairly well covered in the short-term with forward contracted lambs.

Not all buyers operated fully at Bendigo, and this was repeated at Corowa where three major domestic buyers were absent and lambs were quoted as cheaper.

The official saleyard price indicators for heavy lamb and trade lamb have shown little traction and were listed at 667c/kg and 645c/kg respectively on Monday night, according to data from the National Livestock Reporting Service.

Some analysis of the latest lamb slaughter versus saleyard supply highlights the shift to direct selling of lambs and how this is potentially keeping a cap on auction price movements.

Lamb slaughter reached 502,000 head in the seven days ending May 3, which is the latest available data published by Meat and Livestock Australia. It is the second biggest lamb production week recorded by the industry in the past three years.

As a comparison, in the same early May week last year the lamb slaughter was at a ballpark 330,000. It means the latest slaughter is more than 50 per cent above the level of a year ago.

Where it gets interesting is when these lamb slaughter figures are analysed against lamb yarding data from the major weekly prime markets monitored by the NLRS.

Lamb supplies at saleyards were trending at 208,000 in the week ending May 5, which is actually slightly down on the figure of 215,000 counted during the same week a year ago.

Yet slaughter has increased significantly.

The raw data shown side-by-side highlights how many extra lambs are going into the production chain direct, and possibly exaggerated this season by processors pulling cheap kill stock out of Western Australia.

IN THE first week of May this year: 502,000 lambs slaughtered, against 208,000 lambs yarded at major saleyards;

IN THE first week of May in 2023, 329,672 lambs slaughtered, against 215,000 lambs yarded.

It is arguably the key reason why there was no significant lift for lambs this week with export and major domestic processors having their supply needs adequately covered despite the rain – some agents predicting this scenario could quickly change as the industry heads deeper into winter.

Not as many light sheep and lambs are forward sold with these stock more the domain of processors who tend to rely more on the auction system for supply, and they have benefitted in recent months with these animals having low price points at times.

Just a month ago light sheep were often selling for less than 180c/kg at saleyards, or half the value of where the market has lifted to this week.

The margin that has been in these animals for processors is reflected in the boost in export sales to the Middle East and North Africa (collectively known as MENA), which is a major buyer of lean and light mutton carcasses.

Mutton sales to MENA countries lifted 144 per cent during April to 5853 tonnes, overtaking China as Australia’s largest destination for sheepmeat.

Meanwhile, the other factor at play in market this week has been seasonal conditions, particularly for cattle. With much of the south west of Victoria still needing decent rainfall, prices for cattle from these regions to the north were very mixed.