Heavy lamb prices are currently coming off the boil, now tracking below last year's levels and significantly back from the highs seen earlier this year.
And Meat & Livestock Australia (MLA) is attributing it to ongoing global uncertainty, economic impacts and subdued foodservice demand.
There was tight supply in saleyards last week - a 28 per cent year-on-year decline to 127,000 head - yet MLA said the eastern states heavy lamb indicator failed to find support, now back 87 cents a kilogram on a year ago to 838c/kg carcase weight.
"With ongoing uncertainty in global markets and restrictions still in place, overseas demand, in particular from high-end foodservice, remains subdued," MLA analysts said.
Exports to a key market for Australia's heavy lambs - the United States - dropped by 7pc in May.
MLA analysts said this was the result of a decline in demand for Australian product and a backlog of lambs on feed in the US starting to hit the market.
On a domestic level, favourable conditions have continued to uphold prices, with increased feed availability causing a higher retention of lambs.
MLA said for the week ending June 19, eastern states lamb slaughter was reported 11pc lower compared to year-ago levels at 275,600 head, but despite this, prices in June remained above 800c/kg, and well above the five-year average of 683/kg cwt.
"Light lamb prices have maintained a premium over heavy lambs since March," MLA said.
"Robust store competition continues to push the eastern states light lamb indicator higher, up 86 year-on-year to 900/kg cwt.
"Restocker buyers remain active in the market, incentivised by improved conditions and positive rainfall forecasts."
MLA analysts predicted that heavy lamb prices would continue to be squeezed as demand uncertainty drove the current market trend.
There was a reduced yarding of 9000 lambs at Bendigo on Monday, 3000 less than last week.
There was weakened demand from processors, with two major export companies not attending the sale and the rest of the buying group selective and operating at reduced levels.
It was a similar story at Ballarat the next day, with 16,500 lambs of plain to good quality offered but not the usual buying crowd present.
The market was softer on the week before, about $15-$25 a head cheaper across all trade weights, while heavy export lambs were up to $40 cheaper.
