Meat & Livestock Australia (MLA) market information analysts Erin Lukey and Emily Tan said last week lamb slaughter for 2023 is set to surpass 22 million, warning this may lead to supply of lambs on the market outweighing processor demand.
"Coming into the spring flush with new lambs entering the market, older lambs may no longer fall into processor specifications," they said.
The national mutton indicator was 121 cents per kilogram (c/kg) carcase weight (cwt) on Thursday, while the national trade lamb indicator was 454c/kg cwt, which is a 73.4 per cent price difference.
Lukey and Tan said those who are unable to find a space for stock before they age out of the lamb specifications (when they reach 12 months of age or has permanent incisor teeth in wear), could be hit with a 26.6 per cent discount.
Sheep slaughter is 16 per cent higher this year compared to 2022, which Lukey and Tan said illustrates an oversupply in the market.
"Given the record supply with sheep slaughter rising, this has likely resulted in the sheep indicators easing by 36-68 per cent," they said.
"The price has fallen by 70 per cent for mutton while heavy lamb, which is a more premium product, has fallen by 36 per cent, illustrating how premium lamb indicators are relatively steady when compared to commodity lamb."