News

Meat and Livestock Australia (MLA) slaughter figures
confirmed that January lamb supply has been tighter
than usual. The result has been very strong summer
lamb prices, at a time when the market has tracked
sideways in recent years.

Figure 1 shows east coast lamb slaughter for the week
ending the 20^th of January was well below last year.
The 18% reduction in numbers seems to have been due
to the good spring, which saw many lambs finish early
and hit the market in December, leaving a dearth of
numbers in January.

The result has been the best January lamb prices since
2011, with the Eastern States Trade Lamb Indicator
(ESTLI) managing to spend its third week above 600¢.

The ESTLI did ease slightly this week, but only 2¢ to
finish at 602¢/kg cwt. Mutton values took more of a hit,
losing 12¢ to hit 395¢/kg cwt as supply improved.

The question now for lamb markets is whether they can
maintain the strong levels. The five year average would
suggest they can, but figure 2 shows that in the last two
years February has seen the ESTLI ease. Lower prices in
February are likely due to domestic demand waning after
Australia Day and supply improving as shorn lambs start
to come back to the market.

As always the price trend will depend on how many lambs
are actually out there, and as indicated by survey results,
it could be fewer this year, so lamb prices could find some
solid support in the 560-580¢/kg cwt range.

The Week Ahead

We expect prices to ease over the coming weeks, but not
by much. Lamb producers not likely to be forced to sell in
the short terms, so may hold out for stronger prices if we
see any correction.

Mutton values should recover from this week’s correction,
it’s hard to see more supply coming forward given the feed
situation and the wool price.