The gap between the National Mutton Indicator and the National Trade Lamb Indicator closed to 17 per cent last Tuesday — the closest the respective indicators have been on record and well below the five-year average gap of 32 per cent.
Mutton prices have rallied on the back of ongoing demand from China, where African swine fever continues to impact pork production, and burgeoning demand for WA sheep in the Eastern States.
The last time the two indicators were within the 20 per cent zone was during the last flock rebuilding phase in 2011.
Affecting the price gap are lamb prices tracking down from the highs Meat and Livestock Australia market analyst Nicole Selwood reported at the start of the year, with demand for the more expensive product easing off, coinciding with heightened spring supplies.
“Mutton prices have remained elevated across much of the year, generally tracking above 550¢ and reaching into record territory in March, when the indicator surpassed 700¢,” she said.
“As of November 19, WA’s mutton indicator is sitting at 506¢/kg cwt and the WA trade lamb indicator is 646¢/kg cwt.”
Elders WA livestock and wool manager Dean Hubbard said higher values for mutton had been Eastern States driven this year with improved seasonal conditions there.
“Increased demand for WA ewes was strong from NSW,” he said.
“Normally five-year-old ewes would have gone to the processors, but instead, they are being sent over east by the truckloads.”
Mr Hubbard said WA producers may be short on water, but their options to sell mutton had increased.
“The WA flock will be under pressure to maintain numbers,” he said.
“Higher mutton values would be maintained.”
Katanning Regional Saleyard manager Rod Bushell said mutton was 300 to 400¢/kg dressed 18 months ago, but was now more than 500¢/kg.
“Demand for mutton has increased because of lack of numbers as a result of Eastern States’ demand,” he said.
“The recent rain has also taken all the goodness out of the dried-off pastures so the sell-off continues and processors are concerned for supply around February and March.”
Gnowangerup sheep farmer Wayne Pech said the higher mutton values provided a fantastic outlook for WA producers faced with water and feed issues.
“The bigger issue is sheep numbers and will we be able to maintain economies of scale,” he said.
Mr Pech sold 4500 pregnant ewes, mated to meat rams, to the Eastern Sates earlier this year and also sold 1500 older sheep to the local abattoirs.
“We are concentrating on maintaining a self-replacing Merino flock in a difficult season,” he said.
Last year, the National Mutton Indicator averaged 517¢, while the 2020 year-to-date average sits at 606¢, with a month of reporting still to go.
Despite robust lamb prices for the year so far, the NTLI has eased about 20 per cent from the record highs experienced in March.
MLA reported spring lamb supply picked up over September while demand had continued to fluctuate in response to offshore markets moving through different stages of their COVID-19 recoveries.
“Compounding this has been an appreciating Australian dollar, coinciding with financial uncertainty in many end markets,” Ms Selwood said.
“The spread between the two indicators highlights the strength of the mutton market and easing lamb prices.”
“While both lamb and mutton markets are largely driven by offshore end market demand, mutton has continued to find support as a cheaper animal protein source.”