While lamb prices are stealing the spotlight, the eastern states mutton indicator has been maintained at historically high levels in recent weeks.
Sheep and lamb prices have continued to make ground this week. On Tuesday, the eastern states trade lamb indicator closed at 924¢/kg carcase weight (cwt), an improvement of 212¢ from this time last year.
Heavy lambs also gained significant momentum, increasing 223¢ from last year to 962¢/kg cwt. Reports of 1000¢/kg cwt lamb forward contracts have surfaced, in line with the expectation for a shortage of new season lambs entering the market in the coming weeks.
After reaching a peak of 602¢/kg cwt, the eastern states mutton indicator has remained close to record levels since the beginning of June. On Tuesday, the indicator was reported at 594¢/kg cwt, sitting 82¢ above year-ago levels.
Mutton prices have largely tracked sideways in recent weeks, after a sustained rise similar to the lamb market.
The continued strength of mutton prices signals buyers in the market are looking to guarantee supplies to satisfy export demand.
The seasonality surrounding mutton markets, shows prices typically peak at the beginning of winter before entering a period of decline in late July.
This seasonal price decline is due to the historical increases in slaughter seen towards the end of the winter months.
Since the beginning of June, mutton slaughter has been in line with the five-year average. For the week ending 5 July, mutton slaughter totaled 92,101 head, increasing 10% from the five-year average.
At this time of year producers will be deciding on whether to carry sheep through into spring, with the retention of the most productive breeding ewes a priority.
However, in a challenging season, as was the case last year, with poor pasture conditions and the prospect of expensive supplementary feeding, producers look to reduce stocking rates, with older ewes or ewes not intended for joining, turned off.
Looking ahead, sheep slaughter is not expected to reach the peak seen in September last year, due to elevated slaughter numbers at the beginning of 2019.
While the prospect of mutton prices easing from current levels in the coming weeks is a possibility, a reduction in sheep slaughter year-on-year, combined with robust overseas demand, is likely to provide support to mutton prices for the remainder of 2019.