Massive price difference between prime lambs and mutton

The sheep market is not fully benefiting from lamb values hitting big highs, with a 500c/kg-plus price difference between prime lambs to mutton.

Last year has distorted 2024 for mutton supply and pricing, with the sheep market not fully benefiting from lamb values hitting big highs.

As the graphic on this page starkly illustrates, there is not usually a 500c/kg-plus price difference between prime lambs to mutton.

The price gap has narrowed somewhat since October when the spread between lamb and mutton was at an all time high of 556c/kg. Back then heavy lamb was at 846c/kg compared to mutton at just 290c/kg carcass weight, for a difference equivalent to 66 per cent.

Since then heavy lamb has moved higher to be tracking at 908c/kg carcass weight this week, but mutton has shown a bigger improvement off its low base to be at 390c/kg, to bring the difference back to 518c/kg.

This is still an extreme price anomaly.

National price average for heavy lambs versus mutton.

To put it in context the last time the heavy lamb price was around 900c/kg, the average saleyard mutton price was just over 600c/kg.

Historically, looking back over 10 years of data supplied by the National Livestock Reporting Service, the price difference between heavy lambs and sheep is usually within the range of 250c/kg to 350c/kg.

So as it stands today, the distortion between the two meat sectors is costing farmers in the vicinity of $50 a head on an average ewe of 26kg dressed weight. The calculation is based on the exaggerated price difference of more than 500c/kg compared to the historical norm of around 300c/kg between lamb and mutton.

Or to look at it the other way, the long-term statistics suggest the current mutton market is under-valued by 200c/kg considering heavy lamb is costing processors more than 900c/kg (a 26kg dressed ewe x 200c/kg = $52).

The price suppression of sheep goes back to last spring when the mutton market collapsed – the low point was in November 2023 when the average saleyard price was just 117c/kg. As a result a lot more older ewes were carried-on rather than being sold for $20 and $30, as highlighted by a comparison of slaughter figures.

In October and November last year the national mutton kill was a combined 1.31 million head over the two months. In the same time period this year the kill was 2.08 million sheep, explaining why mutton prices have lagged behind the rising heights of lamb.

The price suppression of sheep goes back to last spring when the mutton market collapsed. Picture: Zoe Phillips

There are signs the market is beginning to pull back closer towards normality.

At Dubbo in NSW on Monday this week heavy crossbred ewes sold to $169 and Merino ewes with a skin value to $172, with the NLRS quoting a rate of 400c/kg to 460c/kg for good mutton.

At the Bendigo prime market on the same day sheep were also quoted as dearer with good lines of mutton making from 400c/kg to 430c/kg, according to the NLRS.

Moving forward, the suggestion among agents is the mutton market could quickly gather momentum next year, especially if the seasonal outlook appears favourable heading into autumn.

Agents claim many farmers in key grazing areas, like the Western District, were forced to sell sheep in the drier conditions this year and ewe numbers will quickly drop off.

Linking into this is data from the latest sheep industry survey which found confidence in sheep has improved, and boosted by lamb prices holding at high levels this spring, a significant number of producers are keen to expand breeding numbers.

The survey, conducted by Meat and Livestock Australia, found 47 per cent of NSW farmers indicated a desire to grow their flocks.

There has been a lift in store ewe prices, with young first-cross ewes selling to $364 at Ballarat last Friday. While on AuctionsPlus 3596 young crossbred lambs and ewes averaged $177 last week to show a gain of $47.

It is interesting to note that Naracoorte in South Australia, which not long ago was struggling for feed, paid the top price of $235 on AuctionsPlus for young crossbred ewes listed in NSW.