Lamb prices have jumped all over the place in the last couple months from the lowest prices in recent memory to the highest prices since January 2023, according to Meat and Livestock Australia.
Market Information Analyst Emily Tan said the outlook for the year has vastly improved with the light lamb indicator increasing by 54% since October 2023, with a significant shift in producer sentiment.
“The buyer type for light lambs can inform volumes of lamb sales in the following year. Processors and restockers are the two largest buyers for light lambs, which indicates short-term market sentiment,” she said.
“Light lamb prices drive buyers’ decisions, which indicates market sentiment on the lamb market. Light lambs are more likely to be sold to restockers when the market is positive and weather conditions are favourable. While an unfavourable market and weather is more unforgiving, processor demand for light lambs is relatively higher.”
Ms Tan said prices were hovering around 800-850¢/kg carcase weight (cwt) at the beginning of 2022, weather conditions were favourable and heavier lambs were more likely to be bought by a restocker to be sold in the following year.
“This positive market sentiment resulted in about 70% of light lambs being purchased by restockers compared to about 30% to processors. By October 2022, the dynamic between processors and restockers was unclear, even with prices from ranging from 600-800¢/kg cwt,” she said.
“In May 2023, the dynamic flipped to processors instead of restockers. When prices eased from 500¢ to 300¢/kg cwt over a six-month period and a dry season was forecasted, this switch to processor demand for light lambs was expected.
“Given the current market situation, one might question the volume of light lambs available this year. The 2023 spring flush saw 60-80% of light lambs sold to processors and 20-40% to restockers. While in 2022, only 30-50% went to processors and 40-60% to restockers.
“With the majority of light lambs processed in 2023, there could be less volume of lambs in the autumn and winter months this year. Although the real impact is unknown, a shift in the market has occurred.”
