Heavy lambs closing on 800¢.

This time last year lamb prices were great, sitting north of 600¢ at record highs. Who would believe prices a year later could be more than 100¢ higher? It seems unbelievable, and still, we have slaughter higher than this time last year.

Lamb prices have continued to rise and in the last fortnight, it has been Heavy Lambs which have taken the lead (Figure 1). Heavy lambs gained another 50¢ this week, to within striking distance of 800¢, sitting just below at 793¢/kg cwt. The Eastern States Trade Lamb Indicator (ESTLI) is ‘languishing’ at 758¢ after having gained 34¢ this week.

Supply is not as expected, with lamb slaughter to the week ending the 13th of June actually 3% higher than this time last year (Figure 2).  We won’t be able to confirm until more data is available, but slaughter weights must be on the wane. Prices started from light and Merino lambs at 680 and 675¢/kg cwt respectively, with trade and heavy lamb’s streaks ahead.

The strong prices have drawn out a lot of lambs to the market, with very few left to fill the heavy lamb space, which explains the extreme values. Lighter lambs are being sold as soon as they make slaughter weights and as such prices are lower but still at historical records.

Mutton values have stalled just above 500¢, but they too are well ahead of this time last year (Figure 3).  Mutton will continue to come to market while the rain stays away, which means prices might not move too much higher until there is some precipitation.

What does it mean/next week?:

How many producers would have the guts to forgo a trade lamb price of 750¢ in order to put another couple of kilos on and get 790¢? Not many it would seem, but it has paid off over the last month.

Southern WA, SA and Victoria are in for some follow up rain this week, which is unlikely to help lift sheep and lamb supply. Nothing is on the forecast for NSW, so the sheep will continue to flow while prices are good. The question now is, where are the sheep going to come from when it finally does rain?  The sheep/lamb spread could get very narrow.