They say nothing kills high prices like high prices, writes Angus Gidley - Baird*
With new record highs in the lamb market – the national trade lamb indicator sat at 1178¢/kg carcase weight on August 1 (and that was back 7 cents on the previous week) – has the market over-cooked itself and will this lead to a drop in prices?
We don’t believe it is a case of the market over-heating, but rather processors testing the water on how many lambs remain available.
The questions we have been asking for the past couple of months around how many lambs are left and how many will there be in the new season still remain.
This price spike might have just been the processors testing the numbers to see how many there are and what that will mean for their future kill schedules.
There was nothing on the demand or supply side which suggested such a large jump in prices should have occurred.
That being the case, with a slightly better read on lamb availability, we believe prices will now ease through the next couple of months – similar to the pattern in 2019 – and head back towards 800c/kg.
MLA shows national weekly lamb slaughter numbers remain high but unlike early May where weekly numbers were at record levels (over 500,000 head).
Maintenance shutdowns also continue to impact throughput with varied results for sheep and lamb slaughter.
In the week up to August 1, lamb slaughter lifted slightly but remains impacted by both shutdowns and a general lack of supply – with 370,634 lambs processed, up 2 per cent on the week prior.
The uplift was mostly driven by a 12 per cent rise in NSW, which is back over 100,000 head. Year-to-date lamb slaughter has fallen under 2024 volumes, despite a strong first six months.
Last year slaughter numbers recovered after the June long weekend before declining. This year, it looks like the long weekend was part way into the decline – similar to what we saw in 2019.
If we follow the 2019 trend it would mean a 37 per cent reduction in weekly slaughter numbers from early May to early August, taking 2025 August weekly slaughter to about 330,000 head a week.
National sheep slaughter has also started a downward trend although it has not dropped as far as lamb volumes.
Sheep slaughter is down more than 7 per cent compared to the volumes in early May.
Goat slaughter has also picked up in 2025 (up 23 per cent YTD) and numbers post the June long weekend are higher than before the long weekend.
The smaller reduction in sheep slaughter and higher goat slaughter suggests processors are seeking alternatives to keep chains full as lamb numbers drop.
June export volumes also suggest a reduction in lamb export volumes for the month, down compared to May volumes and down compared to June 2024 volumes. The reduction in volumes would be in line with a reduction in lamb slaughter volumes.
Following on from comments last month about availability of New Zealand lamb, the demand out of the EU and UK is currently very strong and drawing up more Australian lamb exports.
Although together they only represent 9 per cent of total exports, Australian exports to western Europe are up 67 per cent for the first five months of 2025.
At over 19,000t swt for the first five months of 2025, it is already the largest volume to these market in the past 30 years.
But for the 12 weeks to 18 May, UK retail lamb prices are up 5.1 per cent and volume consumed is down 8.8 per cent, UK lamb production is up 3 per cent YTD.
Things don’t quite add up, but it is definitely a market to keep an eye on, and it may prove to be valuable if Australian lamb slaughter weights this year are lower due to poor seasonal conditions.
*Angus Gidley-Baird RaboResearch senior animal proteins analyst.
