Competition drives mutton price rise

Competition drives mutton price rise

Mutton yardings and slaughter volumes significantly softer than 2020 and five-year average levels Restocker and processor buyers continue to operate heavily on tightened supply, placing upward pressure on prices due to tight supply, mutton prices are expected to remain buoyant for the remainder of the 2021 selling season.

The rise of the eastern states’ mutton price and its lower supply over the past 18 months has not been coincidental, according to Meat and Livestock Australia. Mutton yardings for the year-to-date are operating 33% lower than 2020 levels, amounting to 538,000 head.

The lower yardings have supported increased demand at selling centres, being the softest volume-wise since the start of 2019 in June 2021 at 194,000 head. At the processors, slaughter is 5% softer for the year-to-date than 2020 levels, at 112,000 head. Furthermore, compared to the five-year average across the eastern states, mutton slaughter for the year-to-date is back 29%, or 627,000 head.

Basic economics dictates that when supply goes down demand increases, which is particularly relevant in current market circumstances from two fronts. Domestically, it seems evident producers continue to value older breeding stock for rebuilding purposes to assist their operation in delivering lamb supply to a buoyant market.

Processors are also making their mark felt, purchasing heavily across most selling centres to deliver supply for international orders. The demand from China for our mutton has continued to intensify, lifting domestic buyers to purchase available stock. Currently, China’s mutton exports are 30% higher year-on-year compared with 2020 volumes.

It has been the demand from processor buyers to meet China’s demand, coupled with domestic restocker purchases, that have placed upward pressure on mutton prices. This is evident in the Eastern States Mutton Indicator, which has appreciated 13%, or 94¢, since July 13, 2020 to sit at 694¢/kg cwt.

As tight supply continues to remain prevalent and international demand holds favourable, analysis demonstrates mutton prices can expect to be buoyed for the remainder of the 2021 selling season.

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