A dynamic situation is unfolding in Victoria as a combination of supply, labour, climatic and processing woes has a ripple effect throughout the state's saleyards.
Weekly lamb supply remains well down on year-ago levels, but processing volumes are marginally up compared to July 2021.
At the same time, processors are exercising more caution at the rail as a large portion of producers elected to sign onto forward contracts in late 2021 and at the start of the year.
It means fewer processors are competing for a share of the lambs on offer across the state, because the supply of sheep has already been secured.
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Adding to these factors is a wet and cool winter, which isn't usual, but is affecting the quality of finished lambs through at saleyards, according to Meat & Livestock Australia senior market information analyst Ripley Atkinson.
"There's for or five different things across the sector contributing to the way lamb prices are at the moment," Mr Atkinson said.
"For your traditional trade lamb in Victoria at the moment, the price is 692 cents a kilogram carcase weight and that's 217c/kg lower compared to the same time in 2021."
According to MLA data, weekly lamb supply is down by 300,000 head in Victoria, but processing volumes, or sheep heading to slaughter, is up by 260,000 head compared to the same time last.
The slaughter volume of lambs through processing facilities is also 3pc higher or 130,000 head up in Victoria compared to two years ago in July 2020.
"On top of that, the winter shutdown at processing facilities is also occurring at the moment so all of those factors are contributing to the demand in Victorian saleyards which is placing downward pressure on lamb prices," Mr Atkinson said.
"Producers have also subscribed heavily to those forward contracts so the demand from processors at saleyards is lacking because they don't need to purchase as many lambs from the yards."
The rising costs of inputs, such as skyrocketing electricity prices, is another hurdle processors are grappling with as labour shortages continue to hamper the output of many companies across the country.
"We're still seeing the processing capacity limitations because of labour supply or lack of available labour," Mr Atkinson said.
"Plus COVID and influenza absentee rates are affecting plants' capacity to operate in terms of how many lambs can be processed each day.
"There's a lot that's involved and all these aspects are affecting the price of lambs in saleyards."
Bryce Eishold
Bryce is a senior journalist with Australian Community Media's Stock & Land where he reports on all aspects of agriculture. Bryce is also the president of the Rural Press Club of Victoria. Email Bryce at bryce.eishold@stockandland.com.au.
Bryce is a senior journalist with Australian Community Media's Stock & Land where he reports on all aspects of agriculture. Bryce is also the president of the Rural Press Club of Victoria. Email Bryce at bryce.eishold@stockandland.com.au.
