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Sheep and lamb prices remain strong as producers across much of the country experience improved seasonal conditions. All but one of the national price indicators were trading above year-ago levels as of the first week of November, with restocker lambs up nearly 100c/kg to 901c/kg. Light lambs were up 44c/kg to 795c/kg, while mutton has had the next largest increase of 39c/kg, to 603c/kg. Trade lambs are selling at similar levels year-on-year, up just 3c/kg to 755c/kg, while heavy lambs are down 2c/kg, trading at 750c/kg.

Meat & Livestock Australia Market Information Analyst Penny Graham said in MLA’s latest sheep industry projections that Global market implications of COVID-19 continue to impact Australia’s lamb and key export markets, causing a general decline in foodservice demand, particularly for lamb. “Lamb exports in 2020 have been revised lower to reach 269,000 tonnes shipped weight (swt), down 5 per cent on 2019 volumes, while mutton exports are expected to decline 32 per cent to 126,000 tonnes swt,” Ms Graham said. Global market conditions remain rather unpredictable, particularly due to the impact of COVID-19 and its influence upon foodservice industries around the world. As such, the flow of Australian sheepmeat exports through the remainder of the year is expected to continue to fluctuate as markets move through different stages of their COVID-19 recovery."

Ms Graham said with lamb supplies looking at a recovery and subdued demand likely to continue in the short-term, sheep and lamb prices are not expected to return to early 2020 figures. “Mutton prices however have held up well relative to lamb this year, due to the significant decline in supply as producers withhold ewes to rebuild. Looking ahead, sheep and lamb prices could remain historically high, underpinned by positive drivers of demand in key markets. This includes an eventual recovery in foodservice demand locally and overseas, population growth, expanding Chinese imports, the ongoing protein deficiency as a result of African Swine Fever (ASF), stable demand for lamb from the US and limited competition in import markets. This could be offset in the short-term by weaker local and global economies, and a stronger Australian dollar, especially relative to the US dollar.”

Lamb export volumes continue to build, and in October totalled 24,100 tonnes shipped weight, the largest total since March earlier in the year. For the year-to-October, lamb export volumes remain unchanged from the difference for the year-to-September, down 7 per cent. These export volumes align with numbers seen in previous years, as lamb slaughter picks up with a spring flush of lambs coming to market. The US remains the pivotal market for lamb, having surpassed China as the top destination In August. In October, the US took 5,500 tonnes swt, matching last year’s volumes. Chilled lamb remains a key category for the US, and last month exports were 3,800 tonnes swt, up 24 per cent on the same month last year and a remarkable 34 per cent higher than the five-year average. US consumers have good familiarity with lamb and it appears demand is holding up amid the complications of COVID-19, particularly through retail channels.

Lamb exports to China in October were 4,600 tonnes swt, a slight improvement on August and September volumes, but total exports remain 9 per cent back for the year-to-October on 2019 levels. For the Middle East, lamb exports were 4,600 tonnes swt in October. As seen in markets around the world, the economic impacts of COVID-19 are taking a toll on the Middle East, with exports for the year-to-October now back 30 per cent on 2019.

The industry’s ability and keenness to return sheep to the paddock has seen breeding ewe prices excelling so far this season. This year has seen prices track at historically high levels, compounded by significantly low supply and steady demand. This reflects the national flock rebuild gaining momentum, with producers retaining a greater portion of breeding ewes and subsequently reducing the pool of available sheep. For the year-to-date, national sheep yardings averaged 2.5 million head, down 60 per cent on the same time last year at 4.1 million head. For the year-to-date the National Mutton Indicator has averaged 606¢/kg carcase weight (cwt), up 96c/kg, or 19 per cent, on the same time last year. This has largely been driven by price movements in the eastern states, which saw the Eastern States Mutton Indicator

Ms Graham said while 2020 sheep and lamb slaughter are both expected to drop from 2019 levels, down 33 per cent to 6.3 million head and 6 per cent to 20.3 million head respectively, carcase weights will increase. “We anticipate a slight increase in lamb carcase weights for 2020, up 0.7kg/head on 2019 levels to average 24kg/head, and sheep carcase weights to increase to 24.89kg/head up 0.7kg/head from 2019,” Ms Graham said. “However, increasing weights will not be sufficient to offset the decline in slaughter, with lamb production in 2020 expected to decline 3 per cent to 487,000 tonnes carcase weight (cwt) and sheep production to contract 31% to 157,000 cwt. “Though the impact of consecutive drought years has contracted the overall sheep and lamb supply, we do anticipate improved seasonal conditions in early 2020 will filter through the spring flush and establish a rebuilding period from 2021. Reports of increased lamb survival and marking rates through winter have increased confidence for a larger spring lamb crop this year, reflected by the numbers of new season lambs entering the market mid-August.”

Trade Lamb Indicator 1

Image: MLA