Mutton, lamb prices: Low sheep supply holding up rates
Returns for mutton have been narrowing on lamb for most of the year. We find out if the trend is likely to continue.
Low supply is continuing to hold up sheep prices with mutton closing the gap on lamb returns.
And many in the industry believe new price records could be set before winter is over.
The benchmark Eastern States Trade Lamb Indicator was trading at 888c/kg carcass weight on Monday, up 8c/kg on last week and 80c/kg higher than the same time last year.
But, it is 78c/kg shy of the historical high of 966c/kg set in March last year.
The Eastern States Mutton Indicator closed on Monday at 680c/kg, a fall of 21c/kg on last week, but 80c/kg higher than the same time last year.
However, it is 64c/kg lower than the record high of 744c/kg, also set in March last year.
Thomas Elder Markets commodity analyst Matt Dalgleish said mutton prices were historically high due to tight supply as producers rebuild their flocks and good seasonal conditions.
Mr Dalgleish said the gap between lamb and mutton was tracking in a narrow range due to supply and demand and the push to rebuild, similar to the spread during the flock rebuilding phase of 2010-11.
“Normally lamb and mutton prices have a gap of 35 to 50 per cent, but at the moment the gap is around 20 per cent, showing how high mutton prices are comparatively,” he said.
According to the latest slaughter data from Meat and Livestock Australia mutton yardings for the year-to-date are 33 per cent lower than last year at 538,000 sheep, while compared to the five-year average across the eastern states, mutton slaughter is 29 per cent lower.
When it comes to lamb prices, Mr Dalgleish said the ESTLI may push back over 900c/kg, as the seasonal peaks tended to be seen at the end of winter.
Rodwells Bendigo livestock manager Nick Byrne said lamb prices were $15 to $20 dearer at the Bendigo prime sheep sale on Monday.
“I think some of that was weather related, as processors needed to fill kill space, but seasonally supply is tight.”
Mr Byrne said there “has to be a ceiling” in the prices and if buyers start to resist prices they will plateau rather than drop significantly.
Meat and Livestock Australia analyst Stephen Bignell said mutton prices had eased from a high of around 700c/kg at the start of the month.
“I think that was probably the winter peak when supply is at its tightest,” he said.
Despite the historically high prices, he said it was “good news” for the industry that the prices had not led to a further erosion of the national flock with mutton slaughter and yarding rates below the five year average.
While lamb prices had also softened in many categories there was still some momentum behind heavy and trade lambs, Mr Bignell said.
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