THE heat has come off lamb prices with a number of factors cited as the cause for a flattening in returns but with easing domestic supply and strong global support set to continue, the market is expected to recover albeit to a sustainable level.
Price volatility and a lack of supply stability has been rife at most major selling centres in SA since the back end of 2021, according to ANZ head of agribusiness research Michael Whitehead.
He said prices had continued to be impacted by fluctuating yarding numbers, disruptions to the processing sector and changes to export demand.
"The regular seasonal impacts, as the industry heads toward a winter of lambing before spring lambs hit the market, also needs to be considered," he said.
"The fact the industry benchmark Eastern States Trade Lamb Indicator dropped just below 800 cents a kilogram in March, in most years, would still be a positive sign.
"That figure is not only 25 per cent higher than the same point in 2019, but almost 40pc higher than the average for the same time over the period of 2015-2019."
But Mr Whitehead said not only had the ESTLI dropped below the same point for the previous two years, but it was 20pc down on the record high of February 2020.
"This is when the industry was arguably at the start of the sustained restocking period, in the wake of the end of drought," he said.
Robertstown producer Gavin Rodda was selling lambs at SA Livestock Exchange at Dublin on Tuesday and was prepared to take a hit on returns, saying he was not disheartened by a price reduction.
"The same lambs I paid $125 a head for in December last year would be $90 at the moment, so the deal is not that great now," he said.
"But prices did pick up a bit lately to a more sustainable level.
"The returns six to 12 months ago were extreme and that was probably more of a danger than just consistent solid prices.
"I lost about $40 a head on lambs I sold about six weeks ago."
There are two distinct sets of conditions in SA at the moment - flourishing feed in the north and dry conditions coupled with reduced feed loads in the South East and, according to industry commentators, this is also impacting prices.
The average price at SA Livestock Exchange at Dublin recovered slightly this week with a slight increase in yarding of 6000 lambs, compared with the previous market, and reached $7.02/kg but average returns dipped to $6.54/kg earlier in April and then rose again at the end of April to $7.90/kg.
Returns and supply at Naracoorte Regional Livestock Exchange continued to be volatile this week, with numbers falling to 4665 - almost half of the previous week's sale.
Prices at Naracoorte at the beginning of the year were about $8.87/kg and fell to $7.70/kg in March but regained traction at the end of April to finish on $9.10/kg but fell again to $7.96c/kg just a week later and returned even less last week.
There are signals prices are flattening and returning to a sustainable level.
With global inflation expected to ease by the middle of 2022 and global incomes expected to rise, an ABARES report revealed lamb prices were expected to average $9.34/kg in 2022-23.
ABARES also noted a longer period of inflation would support sheepmeat prices overall in the short term to 2023-24, but weigh on prices across the medium term to 2026-27.
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