Lamb prices are at levels not seen since the depths of the Covid-19 inflicted shutdowns in 2020.
The Eastern States Trade Lamb Indicator (ESTLI) fell to 634 cents per kilogram at the end of last week - a drop of 32 per cent year-on-year.
In fact, the leading indicators for lamb and sheep categories all averaged lower in the second quarter than this time last year.
The drop has been so significant analysts have predicted the industry has passed its peak.
The recently released National Australia Bank's July Rural Commodities wrap reported lamb prices are continuing to ease, in line with the view that the decade long price run-up has now peaked.
And the clashing of old season lambs dragging the chain as the traditional influx of new season lambs approaches in spring is also predicted to bring its own implications.
MLA market information analyst Jenny Lim said processors have been more cautious of late.
"Many processors use saleyards to fill the gaps in forward contracts that have already been made in 2021," Ms Lim said.
"Some processors are also going through their yearly winter maintenance shutdowns, which take them offline."
Exacerbating the situation, clashing with the maintenance closures of processors is the late run of old lambs.
While there were more sheep and lambs killed at the end of last week, numbers were still 14pc below the peaks seen in May and June.
Ms Lim said the easing of lamb prices has also seen buyers step back and watch the market before making purchasing decisions.
"This is taking less buyers out of the market, creating downward pressure on sheep and lamb prices across the board," she said.
Regional south east livestock lead for Nutrien Ag Solutions Adam Mountjoy said industry is still getting rid of the left over lambs from last year.
"The spread of lambs is quite widespread with numbers being amazingly strong through the winter period - amazingly strong in number, but returns are certainly lower than what they have been in pervious years," Mr Mountjoy said.
"There are a significant amount of heavyweight lambs right the way through NSW and central and north western Victoria.
"But second to that we have got a lot of residual leftover shorn Merino lambs that have come out of the likes of southern captcha area - out of Tasmania particularly - and they are struggling to find a home at the moment."
He said it is putting constraints on marketing, kill and chain space.
"This is regardless of whether we are talking 16kg Merino lamb or a 32kg heavyweight lamb," Mr Mountjoy said.
"It is quite a diverse mix, but there seems to be plenty still out there as we trudge through winter.
"Right now it's the battle for the chain space and the battle for the commodity and which is best placed to be killed by the processor."
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