Lamb and Mutton to continue their good run - Rural Bank Outlook 2019
- By: "Farm Tender" News
- Ag Tech News
- Jan 09, 2019
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Sheep.
Australian lamb and mutton prices continued their exceptional run in 2018. Lamb prices averaged higher for a sixth consecutive year, and mutton recorded a fifth year of growth. The value of Australian sheep meat exports is set to hit a record high for 2018 with strong demand driving high prices.
Australian lamb and mutton prices continued their exceptional run in 2018. Lamb prices averaged higher for a sixth consecutive year, and mutton recorded a fifth year of growth. The value of Australian sheep meat exports is set to hit a record high for 2018 with strong demand driving high prices.
In 2018, the Eastern States Trade Lamb Indicator (ESTLI) averaged 684c/kg, 9.3 per cent higher than 2017, and included
a record high of 884c/kg in late August. While prices were strong, dry seasonal conditions led to a 2.4 per cent increase in lamb slaughter for the year to October which flowed through to export markets. The value of lamb exports was 13.1 per cent higher for the year to October, supported by increased demand and lower Australian dollar.
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National mutton prices averaged 443c/kg in 2018. This was only one per cent higher than 2017, but displayed remarkable
resilience under the weight of a 29 per cent increase in slaughter for the year to October as many producers reduced flock numbers in response to dry conditions. Export markets absorbed the increased supply, led by China where mutton exports nearly doubled in value.
Lamb and mutton markets are expected to be characterised by tight supply and strong export demand in 2019, leading to higher prices. Supply will be lower in 2019 for several reasons. Firstly, the high sheep slaughter rates of 2018 will not be repeated as producers will be looking to manage current flocks until seasonal conditions improve. Secondly, the increased sheep slaughter in 2018 will have reduced the national flock, meaning fewer lambs are available in autumn, and fewer ewes to be joined for lambing later in the year. Significant rainfall could further stem the supply of sheep if it allows producers to retain more stock to rebuild flocks.
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While supply will tighten, demand is showing no signs of weakening. Growing consumption in the US and Middle East will
continue to provide strong demand for Australian sheep meat exports. But continued growth to China will be the market to
watch in 2019 after showing incredibly strong demand in 2018. Australian exports will continue to benefit from lower volumes exported from New Zealand and a low Australian dollar.
Rural Bank modelling forecasts the ESTLI to spend much of 2019 above 700c/kg. The seasonal trend in lamb prices means they will drop below 700c/kg at times, but expect to see a seventh consecutive year of growth in the average annual price. Mutton prices are expected to see a greater increase than lamb prices, driven by a larger decline in supply. Expect to see mutton prices regularly exceeding 500c/kg.
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