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Lamb market: Australia and New Zealand end of season update
Thursday, 12 September 2024
Key points:
- New Zealand and Australian slaughter are on a downward turn, keeping prices supported for the short term
- New Zealand slaughter and production expected to fall through 2025, impacted by a declining lamb crop
- Australian slaughter and production also set to ease on the back of a tightening flock in the 2025 season (September – September)
End of season update
New Zealand slaughter numbers have fallen in the past month, with the most recent week of 17 August showing lamb numbers sitting 29% lower than the same week in 2023. This lower slaughter has allowed for growth in pricings, which is slowly drawing out the remaining lambs in the system. Procurement pressure is driving this boost in prices, which may be set to continue in the coming months as lamb supply remains tight.
However, total slaughter so far this season (up to 17 August), sits 3.4% higher than 2023, when the lamb crop and slaughter capability was impacted by poor weather conditions. Looking externally, Rabobank report that export demand looked strong to the EU, UK, and USA in July. This contrasts with demand from China, which remains challenging, forcing New Zealand exporters to lean onto other markets to gain maximum value from the carcase.
The picture is similar in Australia, where there have been reduced numbers of lambs available. Rabobank note that this is due to concerns around previously high slaughter levels and poor weather conditions that have resulted in fewer lambs coming forward later in the season. Prices, as a result, are set to continue to trend higher over coming weeks as we see a slow new season crop and a trickle of old season lambs. Total production in Australia is set to increase for the 2024 season beginning in September, breaking records set in 2023, with an increase of 11% to 665,000 tonnes. Lamb slaughter follows a similar pattern, up 11% from 2023 to bring a new record of 27.7m head for 2024.
What does the new season look like?
Beef and Lamb New Zealand (B&LNZ) have released their predictions for the season, which started in September, for New Zealand lamb. It predicts the total number of lambs in the lamb crop down by just over 5% to 19.2m head for 2024/25 (September-September), the latest in the line of yearly declines.
The total number of lambs slaughtered and available for export is expected to be 1.2m head, down from 2023, sitting at 16.8m head for the 2024/25 season. This is due to the smaller lamb crop and higher expected retention to rebuild flocks following drought across the country. Overall, these factors combined, see production predictions to be down just over 7% in total, to around 322,000 tonnes. This is also driven by lighter carcase weights than in previous years.
The Meat and Livestock Australia (MLA) forecast shines a similar light on the outlook for Australia. The sheep flock is set to destock slightly, with a number of breeding ewes expected to come forward, a fall of 2.7% to just under 77m head for 2025. Following this, and the reported fact that slaughter and abattoirs are at capacity currently, sees lamb kill ease by 5% to 26.3m for 2025. Overall, production is set to reduce minorly by 4% to 640,000 tonnes for 2024, as carcase weights are expected to remain stable, assuming there are no significant weather events that could impact weights.
What could this mean for the UK?
Falling production in both the short term over the next month, and longer term in Australia and New Zealand could provide strength to southern hemisphere prices. This strength could ease the differential between GB prices and those in Australasia. If this price differential continues to narrow, import volumes may become less enticing than they have in the recent past.
That being said, demand coming out of China and the Middle East remains a crucial factor, as to how much sheep meat is left to find a home on the international market. With our domestic production having been in decline so far this year, we could see more product imported to cover shortfalls over the key demand periods in the short term. This is against a longer term backdrop of tighter global supplies, as greater anticipated global demand comes online.
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