W28: Mutton & Lamb Update

Published Jul 21, 2023
W28: Mutton & Lamb Update

In W28 in the lamb and mutton landscape, the Australian sheep market experienced significant yarding increases following W27’s positive outlook, leading to softer price returns in certain categories. Lamb yardings rose by 33 thousand heads, while mutton numbers increased by over 7 thousand heads. Merino lambs performed well, with a USD 0.06 improvement, reaching USD 2.95/kg carcass weight (cwt), despite an increase of 1.8 thousand heads in supply. The light lamb and mutton indicators remained firm, while restocker, trade, and heavy lambs experienced price softening due to substantial increases in supply. Australian lamb slaughter is expected to improve as more culled ewes and new-season lambs enter the market. In W27, lamb slaughter exceeded expectations, with 428.76 thousand lambs processed, a 14% year-on-year (YoY) increase. Mutton volumes decreased by 74 thousand heads week-on-week (WoW) due to seasonal maintenance in processing plants, resulting in 70.42 thousand sheep being processed nationally.

Prime lamb farmgate prices in New Zealand declined by USD 0.32/kg over the past three weeks, reaching a level where average July prices are now lower than those in June for the first time in 20 years. The decrease can be attributed to an inventory surplus in China, high export volumes from Australia, and global consumer caution. With no immediate signs of improvement, meat companies are hesitant to predict the opening prices for the new season. Experts warn that the Nov-23 opening prices could be below USD 4.44/kg, significantly lower than the previous two years. North Island lamb prices dropped YoY from USD 5.78/kg to USD 4.57/kg, while South Island prices decreased from USD 5.84/kg to USD 4.63/kg. The market volatility impacted China, North America, and the United Kingdom (UK), leading to falling prices and static demand. However, steady demand from the Middle East provides some stability. The New Zealand lamb market outlook remains uncertain, and the industry expects it may take time for inventory levels to be depleted and markets to recover.

Lastly, the Irish sheep trade in W28 was expected to experience a tight spring lamb supply in factories. This can be attributed to reduced numbers from Northern Ireland due to the July 12 commemorations. The Irish Cattle and Sheep Farmers' Association (ICSA) expressed concern about the current prices farmers were receiving, stating that the production cost is at USD 8.09, while lamb prices have fallen below the production level. Kildare Chilling offered 3.26/kg plus a USD 0.11/kg Quality Assurance (QA) bonus to 40kg for hogget ewes, totaling USD 3.37/kg. Other outlets did not provide a quote for hoggets, although the supply remained higher than in the same period in 2022. Irish Country Meats (ICM) quoted USD 7.87/kg plus a USD 0.22/kg QA bonus for spring lambs. Other outlets offered USD 7.87/kg plus a USD 0.17/kg QA bonus. Kildare Chilling reduced its price for ewes to USD 3.26/kg plus a USD 0.11/kg QA bonus up to 40kg carcass weight, totaling USD 3.37/kg. ICM maintained USD 3.37/kg price for ewes up to 45kg.

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