Demand shift adding plenty of value to mutton

Demand shift adding plenty of value to mutton

Sheep
While lamb prices are currently doing what we would expect with the increase in spring lamb supply, mutton prices are rising in the face of increasing supply.

While lamb prices are currently doing what we would expect with the increase in spring lamb supply, mutton prices are rising in the face of increasing supply.

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The Stock Take: Mecardo's Angus Brown writes about mutton values.

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While sheep supply isn't quite at the peaks of last year, it is at an eight month high.

Impressively, spring usually signals price lows.

At the moment, mutton prices in saleyards and over the hooks are not far off record highs.

Australian sheep and lamb markets usually behave in a relatively predictable way, with strong supply seeing lower prices, and vice versa.

While lamb prices are currently doing what we would expect with the increase in spring lamb supply, mutton prices are rising in the face of increasing supply.

Regular readers will know we are largely putting the stronger mutton demand down to African swine fever and the protein deficit in China.

The shift in demand has been marked.

From 2016 to 2017 demand increased, as indicated by higher slaughter and a higher price (Figure 1).

FIGURE 1: Sheep supply vs price. Annual sheep slaughter versus the average mutton price shows the shifting demand trends over time.

FIGURE 1: Sheep supply vs price. Annual sheep slaughter versus the average mutton price shows the shifting demand trends over time.

From 2017 to 2018 demand increased again, with a large increase in slaughter seeing the same average price.

This year, there is expected to be a slight drop in sheep slaughter, but there has been a strong shift upwards in price.

It's safe to say mutton demand has increased for a third straight year.

We can see that just back in February, monthly sheep slaughter of 930,000 saw an average mutton price of 395c/kg cwt (Figure 2).

FIGURE 2: Monthly sheep supply vs price. When looking at the supply and price on a monthly level, we can see that the recent price rise is much stronger than previous demand curves.

FIGURE 2: Monthly sheep supply vs price. When looking at the supply and price on a monthly level, we can see that the recent price rise is much stronger than previous demand curves.

In October, the average price was 548c and we estimate total slaughter at 993,000 head.

November slaughter is on track to be higher again, with prices similar or maybe higher, suggesting demand might be strengthening further.

What does it mean?

With strong demand keeping prices close to record highs in the midst of strong supply, it's hard to see too much downside for mutton.

When supply tightens, a 600c average price for mutton is achievable.

Next autumn and winter an extraordinary price of 700c might be on the cards.

The story Demand shift adding plenty of value to mutton first appeared on Farm Online.

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