Prices buckle but spring turnoff yet to come into markets

There is little joy for lamb producers with prices diving and the surge of spring turnoff is yet to hit saleyards.

Australian lamb producers could see their lowest prices for years as global financial pressures and a surge in supply collide.

Key industry analysts are warning of values buckling under big numbers, on the cusp of spring lamb supplies hitting the market.

On Monday, early runs of new season lambs – which normally attract a premium – dropped by up to $15 at Bendigo despite low offerings, while indicators tracked by the National Livestock Reporting Service are all sitting below 500c/kg for the first time since 2015.

Bendigo agent Chris Nevins from FP Nevins and Co at Bendigo said no one knew what was going to happen this spring but “it’s not going to be pretty”.

“We already have lamb prices dropping $10-$15 a week and we don’t even have big yardings yet,” Mr Nevins said.

He sold sucker lambs for a client on Monday, and while disappointed the rates were not higher, the client said “at least I know I got that”.

“It is a bitter pill for producers to swallow that lambs that made $200 last year are making $130-$140 now for the same quality,” Mr Nevins said.

“I’ve never seen the market slide as quickly as it can and while the prices are down for early suckers, those prices may look good later on if the market keeps dropping away.”

Victorian Farmers Federation livestock group president Scott Young said he expected a tough period for the lamb industry.

VFF livestock president Scott Young. Picture: Zoe Phillips

“I would like someone to tell me where the light is at the end of the tunnel,” Mr Young said.

“I really hope there are some positives for the industry because we know we have a great product but right now, there’s no positivity.

“We need restockers to buy lambs to put a floor in prices this spring but with the dry weather closing in, there is just no appetite to do that.”

Rabobank senior protein analyst Angus Gidley-Baird said the lamb industry was in an “unfortunate position”.

“We are in a situation where we have managed to get record lamb production at a time when global demand is quite soft,” Mr Gidley-Baird said.

“Things are looking soft and we need to get through the next six to 12 months.”

Lamb was also different to beef in terms of prospective price recovery, as Australian product dominates world export markets, in contrast to beef where the shrinking US herd was expected to be a positive for Australian exports.

Longer term prospects for lamb are more positive, Mr Gidley-Baird said, especially with free trade agreements with the United Kingdom and India in place, and work progressing on an agreement with Europe.

”We probably have to do a fair bit of legwork to drive demand in India and also in Europe and United Kingdom, but that’s incumbent on us to generate that demand,” Mr Gidley-Baird said.

“I also think longer term economically, as things improve, markets like the United States will return to what they were before.”

He said without accurate numbers, it was hard to determine future lamb supplies but it was almost certain there was another large volume of lambs to come onto the market this spring.

Analysts predict a tough spring selling period ahead.

Mecardo managing director Robert Herrmann said there were no short term answers to the lamb industry price woes.

“It made sense with the better seasons to ramp up and rebuild strongly and now we are reaping the crop we planted,” Mr Herrmann said.

“The longer term outlook for red meat, in an export dominated system like Australia, is very good but when you are export dominated, you rely on those economies.”

Mr Herrmann said there was nothing he had seen to suggest lamb prices might rise after spring, and any recovery in prices would take time, “not a snap of the finger”.

“There is no silver bullet solution to this season, especially if the weather continues to close in,” he said.

“There is nothing you can do to influence the market so you need to focus back on your business and costs of production.”

The hangover of the past season’s lambs – which were difficult to finish earlier due to wet conditions – has taken the shine of winter lamb prices and stripped premiums normally seen from May to July.

NLRS market information manager Stephen Bignell said national slaughter figures were up, and were being driven by lifts in Victoria and NSW, with weekly numbers 30,000 higher than the biggest weeks of last year.

In the latest figures collected by NLRS from processors, national weekly slaughter was almost 445,000 lambs, the highest figures since January 2021 – but at that time, there was a supply backlog caused by staff shortages.

“If January 2021 figures are excluded, last week’s slaughter is the highest since the 2019 drought,” Mr Bignell.

“As would be expected, the jump in supply has caused an easing in lamb prices with the national lamb indicator currently sitting at 450c/kg,” he said.