ESTLI closing the gap on last year

The rain this week probably wasn’t as good as might have been expected. However, whether it’s the rain, or simply declining supply, good lamb prices are rallying and now sit just below the record levels of last year.

The Eastern States Trade Lamb Indicator (ESTLI) is finally making a run towards what could be called winter highs. The last three weeks have seen the ESTLI gain 54¢, or 9% to hit a five-month high of 654¢/kg cwt. Figure 1 shows the ESTLI sitting just below the same time last year, the first time in four months it has even been close.

As we would expect, it seems to be tight supply pushing the market higher. Lamb slaughter is trending down, as shown in Figure 2. This was helped last week by seasonal maintenance slowdowns in South Australia. The major slaughter states of NSW and Victoria have only seen slaughter rates decline marginally.

Mutton prices were steady this week, and unlike lamb values, are still 10% behind the levels of this time last year. This should really be no surprise given sheep slaughter is still running 37.5% above the same time last year. Sheep yardings are also still well ahead of last year’s levels.

In the West lamb and sheep prices were steady this week, both at levels behind the eastern states. WA values are still well behind last year’s levels, but there is still some upside with export demand running strong.

The week ahead

The bit of rain which has fallen isn’t going to be enough to finish autumn lambs, there will have to be some follow up. We might see the flow of female or merino wether lambs for a few weeks however, as growers take a wait and see approach. This leaves a nice supply gap over the coming weeks, and possibly rising prices if there aren’t too many more maintenance shutdowns.