Trade lambs at a premium in 2021
08 July 2021
Key points:
- Slaughter and yarding volumes up 19% on June 2020.
- Slaughter and yarding volumes are 4% stronger compared to the five-year average, indicating a larger than expected lamb cohort of 2020.
- Analysis of the current favourable Eastern States Trade Lamb Indicator may induce producers with available supply of lambs to turn stock off to sell into an appreciating market.
Lamb supply
Both lamb yardings and slaughter volumes are up 19% this month compared to June last year. Compared to the five-year June average since 2016, slaughter and yarding volumes are both operating 4% stronger in June 2021.
These statistics operating in parallel suggests the 2020 lamb cohort was larger in size than initially expected, delivering more supply to support global demand for Australian lamb, driven by the US and China.
The parallels between both the slaughter and yarding volumes for the month of June compared to 2020 and the five-year averages indicate the current lamb market is performing stronger than initially expected supply-wise in 2021.
Price
The current market conditions in the eastern states offer potential for producers to sell into a market that is performing stronger than it was for the same time in 2020.
Currently, the ESTLI is operating at a premium of 116¢ compared to the same time in 2020, sitting at 875¢/kg cwt. Producers with available lamb supply to sell into this appreciating market will be an interesting dynamic to watch moving forward.
The impact of this on supply will be dictated by how producers choose to play their cards – either by rebuilding or by taking advantage of the current market strength, which is a similar conundrum to what is happening in the current cattle market.
ESTLI favours producers with current supply.
© Meat & Livestock Australia Limited, 2021
