It’s been a wild start to the year in sheepmeat markets. The sharp rally in the closing weeks of 2024 saw producers rush to book lambs into processors at higher prices, leaving the processing sector unable to handle the rush of saleyard numbers (encouraged by the lift in prices) in early 2025.
Only mutton was able to escape heavy punishment with most lamb categories shedding $2/kg dw to pull prices back to mid-November, early December levels. The speed of the pre-Christmas rally was breath-taking and looks to be more about processors ensuring adequate supplies, so that they could keep working at high-capacity levels through January.
Markets are still trying to find a balance between supply and demand after the Christmas/New Year break. A large drop off in yardings this week has seen prices stabilise somewhat. We expect prices to start to regulate lamb supplies better in the next few weeks. Slaughter schedules will also free up as processors work through the flurry of pre-Christmas bookings.
A silver lining of the price correction is that restocker and light lamb values have fallen again. This will encourage increased demand from price sensitive export markets and the lamb feeding sector which has access to cheap supplies of barley for the first time in several years.
The message from our agent network is that lamb supplies are set to tighten as we move through summer into autumn - a result of the heavy ewe cull the past few years, lower joinings and lambing percentages due to adverse seasonal conditions across the south. Last year’s lamb drop was the lowest in several years which will mean lamb slaughter should ease sometime in 2025.
Link between lamb prices and sheep slaughter
The composition of the Australian sheep flock has changed from sheep bred for wool to dual purpose sheep or meat breeds. Sheep slaughter is now comprised largely of ewes rather than a mix of cast for age wethers and ewes.
As a result, increasingly, the key driver of sheep flock dynamics in Australia is the value of its output, being lamb rather than a combination of wool and meat. So as the lamb price increases, producers will be encouraged to retain ewes and ewe lambs to build breeding flocks and conversely when the value of lamb falls and ewe profitability contracts, sheep flocks may be curtailed with less productive ewes culled and not replaced.
The chart above shows a mostly strong inverse relationship between lamb prices and sheep slaughter since 2015. When the price of lamb rises, sheep (ewe) slaughter declines. Source: MLA.
The sharp fall in lamb values in early 2023 has prompted several years of flock liquidation in Australia. We are expecting a period of sustained lamb price strength through 2025 which should encourage ewe retention and lower sheep slaughter levels.
This chart shows sheep slaughter levels this year vs 23/24 and the seven-year average. Source: MLA.
A return to more normal seasonal conditions across southern Australia will also encourage flock rebuilding and put further downward pressure on sheep slaughter levels which could fall towards the five-year average sometime during 2025.
First cross ewe values should also rebound strongly through 2025 as producers seek to increase lamb production as profitability returns to lamb production. As ewes are pulled out of the slaughter schedules mutton values will also firm solidly through 2025.
Heavy lambs waiting on Greek Easter
Demand for heavy lambs is driven by the US export market. Generally, heavy lamb values peak during the first quarter as buying picks up ahead of Greek Easter celebrations in the US. After a period of Lent, where many Greeks favour vegan type diets, Greek Easter food is intrinsically tied to feasting on lamb and goat on the spit.
Eastern states of the US have the largest Greek population outside Greece. With Greek Easter coinciding with Catholic Easter in late April, demand for heavy lambs should strengthen over the next few months.
This chart shows the national saleyard indicators prices for heavy lambs this year vs 23/24 and seven-year avg. Source: MLA.
Lower trade lamb values to help demand
As an Elders agent put it, "I don’t think $10/kg dw lamb prices do anyone any good". This means that while providing a sugar hit in the short-term, in the longer-term high lamb prices damage demand. This is a particular risk in the current cost of living crisis where consumers are sensitive to prices on food items. Currently prices are trying to find a level where they match supply and demand, we think it’s around $8.50 to $9/kg dw.
This chart shows the national saleyard indicators prices for trade lambs this year vs 23/24 and seven-year average. Source: MLA.
Light lamb values will encourage demand
Prices for light lambs didn’t rise to the extent of heavier categories pre-Christmas. The value of light lambs is linked to export demand from the Middle East which is more price sensitive than other lamb export markets. The recent fall in values should attract a lift in demand which will underpin values moving forward.
This chart shows the national saleyard indicators prices for light lambs this year vs 23/24 and seven-year average. Source: MLA.
Restocker demand hindered by hot weather
The economics of feeding lamb this year appear strong with feed barley available at $270 per tonne across major feeding regions. As lamb markets normalise, and we get through the current spell of hot weather, look for feeding activity to increase which will support restocker lamb values.
This chart shows the national saleyard indicators prices for restocker lambs this year vs 23/24 and seven-year avg. Source: MLA
Mutton supported by price competitiveness
In contrast to other sheepmeat categories, mutton has held its value, partly due to its price competitiveness when compared to other meat proteins. Globally, consumers have been adjusting purchasing habits to favour lower cost food items. This seems to be underpinning strong export demand for mutton which is supporting current mutton values. As sheep slaughter eases this year, mutton values should continue to move higher as we move through summer into autumn.
This chart shows the national saleyard indicators prices for mutton this year vs 23/24 and seven-year average. Source: MLA.
From the rails
Read what Elders livestock representatives from around Australia are saying about the markets in their regions.
The NSW lamb market is still trying to establish a level with huge volatility at the saleyards the past month. With prices coming back sharply, supplies should ease although it remains hot and dry through parts of NSW which could entice producers to offload stock if they are worried about feed availability and stock condition.
| NSW sheepmeat saleyard indicators | ||||
| 24 Jan 25 | +/- week | +/- month | +/- year | |
| Lambs | ||||
| Heavy | 810 | 817 (-7) | 981 (-171) | 716 (+94) |
| Trade | 788 | 792 (-4) | 938 (-150) | 711 (+77) |
| Light | 702 | 709 (-7) | 810 (-108) | 667 (+35) |
| Restocker | 704 | 709 (-5) | 861 (-155) | 619 (+85) |
| Mutton | 353 | 370 (-17) | 383 (-30) | 311 (+42) |
Source: MLA
It has been volatile at the saleyards, but abattoirs have settled at between $8-8.40/kg for lambs on the grid. And mutton has just been good around high $3/kg mark. - Peter Homann, National Livestock Manager.
| Victorian sheepmeat saleyard indicators | ||||
| 24 Jan 25 | +/- week | +/- month | +/- year | |
| Lambs | ||||
| Heavy | 816 | 829 (-13) | 993 (-177) | 749 (+67) |
| Trade | 803 | 813 (-10) | 954 (-151) | 734 (+69) |
| Light | 769 | 765 (+4) | 845 (-74) | 685 (+84) |
| Restocker | 718 | 721 (-3) | 757 (-39) | 716 (+2) |
| Mutton | 366 | 364 (+2) | 438 (-72) | 302 (+64) |
Source: MLA
SA markets have followed trends in other eastern states lambs markets, although light and restocker lambs have suffered this heaviest falls given the lack of feed availability and the need to import feed grain for feeding given the poor harvest in SA.
| SA sheepmeat saleyard indicators | ||||
| 24 Jan 25 | +/- week | +/- month | +/- year | |
| Lambs | ||||
| Heavy | 784 | 757 (+17) | 877 (-93) | 739 (+45) |
| Trade | 774 | 791 (-17) | 902 (-128) | 692 (+82) |
| Light | 674 | 764 (-90) | 899 (-225) | 667 (+7) |
| Restocker | 661 | 724 (-63) | 841 (-181) | 579 (+82) |
| Mutton | 336 | 334 (+2) | 383 (-47) | 253 (+83) |
Source: MLA
"Our market has held up quite well. Most of the volume has been going through the saleyard at prices $8.50-8.60/kg dw vs $7.40-7.50/kg dw direct to works. Prices have dropped off around $10-15/hd this week bringing prices back to $7.80/kg dw but still better than the abattoirs. Water is becoming the issue from Albany through to Esperance.
Mutton has held up well $3.80/kg dw in the yards vs $3.40/kg dw direct to works.
But we are expecting numbers to drop off in 3 to 4 weeks. Everything’s been mated and while there is still some preg testing to be done we expect the ewes to test well given the season.
There will be a mated ewe sale February/March with some choosing to liquidate their flocks due to live export situation and issues in the local processing sector. We have had two smaller processors pull the pin in recent months.
There will be two boats looking for 80,000 whether lambs in March and we expect the feedlotters will be looking to restock their feedlots around the same time. We are trying to put together a sale of July/August drop lambs around 35-36kgs aimed at the restocking feedlots.
Given the fall in eastern state lamb prices, we are not expecting any interstate processor activity at this stage, but thoughts are that supplies will tighten up after the current rush and it could be a different story come autumn." - Wayne Peake, Elders Livestock Sales Manager, WA
| WA sheepmeat saleyard indicators | ||||
| 24 January 25 | +/- week | +/- month | +/- year | |
| Lambs | ||||
| Trade | 728 | 789 (-71) | 727 (+1) | 557 (+171) |
| Light | 705 | 730 (-25) | 828 (-123) | 651 (+54) |
| Restocker | 667 | 691 (-24) | 566 (+101) | 377 (+290) |
| Mutton | 315 | 307 (+8) | 222 (+93) | 73 (+242) |
Source: MLA
“Sheepmeat market is being affected by a ship being out of action which is affecting movement to mainland, more of an impact on mutton than lambs. But mutton still trading well around $4/kg dw mark. Lambs are around $7.60/kg but processors may need to sharpen up to keep them at home.
We look like having a bit more flexibility with one of the processors now being able to kills lambs over 30kg dw which opens that US export market for local producers to kill them here.” - Gavin Coombe, State Livestock Manager, Tasmania
| TAS sheepmeat saleyard indicators | ||||
| 24 Jan 25 | +/- week | +/- month | +/- year | |
| Lambs | ||||
| Trade | 739 | 827 (-88) | 794 (-55) | 719 (+20) |
| Light | 723 | 784 (-61) | 799 (-86) | 641 (+82) |
| Restocker | 673 | 693 (-20) | 798 (-125) | 513 (+173) |
| Mutton | 370 | 370 (n/c) | 278 (+92) | 220 (+150) |
Source: MLA
Sources: Price data reproduced courtesy of Meat & Livestock Australia Limited.
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