Where are lamb prices headed?

11 July 2018

Lamb prices look to be stabilising after unprecedented growth, but it remains a challenge to gauge what the future holds.

Lamb prices have gone from strength to strength since the beginning of May with the market continuing to set records across the country, culminating in lambs reaching a record $276.2/head at Wagga Wagga.

However, after peaking at 726¢/kg carcase weight (cwt) last Wednesday, the national trade lamb indicator appears to have stabilised somewhat. Holding between A$710¢ and A$720¢/kg cwt during that period and representing the most stable period of prices since the beginning of June.

Slaughter numbers falling

Lamb slaughter numbers are beginning to decline, down 15% from the beginning of June. The number of lambs slaughtered weekly since the beginning of May has been significantly higher (as shown below) than the average of the last five years. This suggests there may not be the same supply of slaughter ready lambs in the coming months.

Can the market keep this up?

Only time will tell if the current situation is sustainable. However, if the past can highlight anything, it’s that lamb prices generally peak in the June/July period before they begin to settle as new season lambs enter the market from August through spring.

Poor seasonal conditions so far in 2018 draw into question the ability to provide young lambs in this time period. Drought, combined with very high supplementary feed prices, will likely delay the sale readiness of young lambs and it’s likely they will not be entering the markets until later in the season.

Whether prices trend as normal will depend on the rate those new season lambs enter the market, or if there will be a lag between old season and new.

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