Export consumer demand for lamb remains uncertain

Coronavirus continues to impact lamb market

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Lamb prices are expected to continue trend lower, year-on-year, due to increased supply and subdued consumer demand in both Australia and export markets.

Lamb prices are expected to continue trend lower, year-on-year, due to increased supply and subdued consumer demand in both Australia and export markets.

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Coronavirus continues to impact on Australia's lamb market as consumer demand remains uncertain.

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The Coronavirus continues to impact on Australia's lamb market as consumer demand remains uncertain, particularly in export markets, according to Rural Bank's commodity insights update released this week.

Tony Williams, Rural Bank's Regional Manager Agribusiness NSW, said various stages of Covid-19 outbreaks and recoveries are still being felt in key market areas, even though there have been some positive signs for lamb exports in recent months.

"Volumes to the United States have been trending higher year-on-year between June and September, and recovery of volumes to the Middle East since July," Mr Williams said.

"But lamb prices are expected to continue trend lower, year-on-year, due to increased supply and subdued consumer demand in both Australia and export markets."

The Eastern State Trade Lamb Indicator (ESTLI) increased by 20.8 per cent in September, a big correction following a 32.1pc decline between June and August.

"The recovery in prices, in conjunction with an increase in supply, indicate an improvement in demand," Mr Williams said.

"Good rainfall in August and September, coupled with a positive rainfall outlook, boosted demand from re-stockers and feeders which generated stronger competition in saleyards."

But he said despite this rally, the ESTLI is 4.7pc lower year-on-year and is expected to continue to remain lower year-on-year as consumer demand, particularly through foodservice channels, remain subdued compared to last year.

However, Mr Williams said the restrictions on Victorian processing capacity which eased at the end of September will allow Australian sheep and lamb markets to operate with greater certainly as the industry heads towards its peak supply period.

"It will provide confidence that the spring flush of lambs will be processed," Mr Williams said.

"Providing greater confidence to markets with additional competition at saleyards which should take some pressure off prices."

The improvement in processing capacity to 90pc in regional Victoria and 80pc in metropolitan Melbourne and the relatively tight supply of sheep should allow for enough capacity to process the spring flush of lambs.

According to Mr Williams, lamb supply is expected to continue its upward trajectory with a further 14pc increase in eastern states weekly slaughter expected by December while sheep supply is expected to remain very tight.

"A year-on-year increase in supply is achievable based on increased lambing and survival rates compared to last year,' he said.

"Sheep slaughter is also expected to follow the typical seasonal pattern and trend higher, however a low national flock and producer intentions to retain breeding stock could keep slaughter rates up to 40pc lower, year-on-year."

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