The collapse in Australian sheep prices shows no signs of abating. Bord Bia price analysis for the week ending 29 July shows the average lamb price falling below the €3/kg mark and recorded at just €2.89/kg. This compares to €4.50/kg for the corresponding week in 2022 and €5.00/kg at the end of July 2021.

The differential between northern hemisphere and Australian lamb prices now stands at over €3.50/kg in Ireland, Britain and other key European sheepmeat markets.

Sheep production in Australia has been running at an extraordinary high level for the last 18 months. The latest report from Meat and Livestock Australia (similar to Bord Bia) highlights that exports of lamb and mutton are running at their highest level on record in 2023 while beef exports are also booming and at their highest level since 2020.

Meat and livestock Australia report that the sheep slaughter “has remained elevated this year, with total yearly slaughter 63% or 1,636,779 head higher year-to-date. Last year, producers were still retaining ewes for breeding due to favourable seasonal conditions and strong restocking remand. This week, NSW sheep slaughter increased by 148% week-on-week and Tasmania increased by 121%.”

Confidence is low

The collapse in sheep prices has reduced confidence in the sector and is resulting in higher numbers of ewes and ewe hoggets being drafted for slaughter, which is compounding issues. The kill is expected to remain high with "good lamb and calf drops this season". It is expected that with favourable pastoral conditions that lambs should start moving through markets in the coming months. It is hoped that improved demand from exporters, factories and retailers in the wake of processing returning to normal following winter shutdowns might help to work through the higher numbers and leave some chance of the trade steadying.

Closer to home

Returning to these shores, the trade continues to face significant downward pressure. Monday’s bank holiday is giving processors an even greater edge in negotiations at the start of this week. Factories have reduced base quotes by another 20c/kg for Tuesday with reports indicating that most plants are now working off a base price of €6.00/kg to €6.10/kg.

When quality assurance payments are factored into the price, it leaves a high percentage of lambs trading from €6.20/kg to €6.30/kg, with smaller numbers trading through groups or securing conformation bonuses selling up to €6.40/kg.

The poor kill-out of lambs and continued reduction in prices has slowed throughput with factories keen for good-quality lambs. This is reflected in mart sales where good-quality fleshed lambs are a brisk trade.

Ewes

The ewe trade for heavy fleshed ewes remains best in marts with a number of buyers active again in recent weeks. Top-quality ewes are trading in the region of €1.70/kg to €1.90/kg with the best-quality types selling to €2/kg and higher on occasion.

This is in sharp contrast to the trade in most factories with quotes for ewes ranging from €2.90/kg back to €2.70/kg with general prices ranging from €2.80/kg to €3.00/kg. Ewe prices in abattoirs specialising in the trade for top-quality ewes are significantly higher, rising to upwards of €3.40/kg to €3.50/kg.