Christmas is looking a little brighter for Australian sheep producers, with prices generally moving in an upwards direction across most saleyards with the upwards trend tipped to continue after the market break.
The national trade lamb indicator has climbed to 622c, up 179c compared to four weeks ago while the heavy lamb indicator has gained 202c in four weeks to 684c.
Episode 3 market analyst Matt Dalgleish said the prices had been getting back to better levels, that were more reflective with the export demand.
"With this rain that's come through that's sort of got people reassessing and looking at what's in front of them in terms of pasture rather than worrying about what's going on with regards to El Nino," he said.
"I think even the fact that some of the international meteorology agencies are indicating that the strength of the El Nino is breaking...people are realising that their expectations of a bad drought scenario hasn't really eventuated, at least not yet.
"For the time being those very low prices weren't reflecting what was really happening with the market.
"The processors are aware that the turnoff is higher for sheep and lamb in spring with the spring flush so they were gearing up towards being able to cope a little bit better with the flows, so they probably have got a bit better at handling any backlogs, meaning a bit more efficiency getting numbers through."
Mr Dalgleish said once the market restarts in January, gentle upwards pricing movement would hopefully continue.
"The next main factor that producers will be looking at is what the Bureau is saying in terms of forecast once we get through summer into that autumn break, and that will very much depend on whether the El Nino reforms in the ocean and if we revert back to a dry forecast for 2024, or whether we don't see a strong reforming of El Nino and we go to a more average season," he said.
"Until then I think we're going to consolidate a bit sideways, maybe with a slight upwards bias... I think potentially lamb and mutton we wouldn't be surprised if they add another 50c, closer to $1 in terms of carcase weight over that summer period."
According to the newly released Australian Agriculture Outlook 2024 from Rural Bank, the new year should bring further opportunities for export growth in the red meat sector, with lower retail prices likely to boost domestic consumption as well.
Rural Bank agribusiness relationship manager for South Australia Ryley Verley said a tough six months had been driven by a limited capacity to process the large national flock.
"Lamb prices are expected to see some recovery in the new year while the outlook for mutton remains subdued," he said.
"Production is expected to remain relatively high in the first half of 2024 but is expected to fall from the high levels seen in 2023."
The document notes that there have been reports of forward contracts ranging from high 500c/kg and low 600c/kg already being offered by processors.
Demand for premium products, along with food service industry demand is still tipped to remain lower in 2024 however keeping export prices subdued.
Mutton prices are expected to find extra support in 2024 as the surge in supply wanes but the dry seasonal outlook is expected to keep some level of pressure on prices.