LAMB | Australian lamb floods markets

This trend has continued, with lamb slaughter along the eastern states and SA the week ending Oct the 18th hitting 360,000 lambs,14% above the same week last year (MLA). Lamb yardings have also jumped across the eastern states which has pressured prices. Uncertainty regarding prospects for the coming season is likely to be a driver for the increased throughput while buyers are being selective as the dry conditions have taken their toll on lambs.

Despite Aussie lamb supply being higher, this was not reflected in the Sept lamb exports which were actually 8% lower than Sept 2011 at 14,000t. One reason could be that lambs have been killed at lower carcass weights which has impeded the amount of exports on a tonnage basis. However, stocks have more than likely just flowed into Oct exports, which are on track to becoming the second largest month of exports on record after Oct 2007. Overseas importers are likely taking advantage of lower asking prices to build stocks, which is no doubt making it hard for NZ lamb exporters to compete with.

UK lamb slaughter low

UK lamb slaughter continues to run below last years levels and five year average levels. Since June, UK lamb slaughter has been consistently lower than last year.

The number of lambs slaughtered from June to September was 4.02 million head or down an average of 9% when compared to the 4.42 million slaughtered in 2011 over the same period. Recent statistics from DEFRA showed lamb slaughter had fallen in September which wiped out earlier expectations of a potential lift. UK lamb slaughter through September was down 11% year on year to 1.166 million head. Farmers have struggled to finish lambs this season due to poor weather earlier on, which is likely the reason for the lower throughput. If this were the case, these lambs will have to be slaughtered at some stage which could pressure prices later on in the season, dependent on demand levels at the time.