Lamb prices in the United States more than halved between May and August on the back of increased supply and a looming recession.
Before that, US lamb prices had been running hot for the best part of 2022.
And although ground was made in September and October, according to the latest Steiner analytics, the threat of a recession in the US is causing foodservice traffic to slow.
Mecardo analyst Angus Brown said the US imported lamb market can dictate how much local processors are willing to pay back here in Australia.
"Although the price for lamb in the US has seen a collapse, values haven't impacted Aussie export prices just yet, but headwinds are on the horizon," Mr Brown said.
"Falling US lamb prices aren't disastrous for us, as they have come back to a level still higher than our values.
"But the reasons for the fall might pose some headwinds with weaker demand for lamb in general not great for our exports."
Mr Brown said lambs are generally still more expensive in the US than here in Australia, but the spread is now much narrower.
In May, the Aussie dollar was around US70c with the lamb price in the US AU728c/kg or 1584c/kg cwt.
"The US lamb price was nearly double Aussie lambs at the time, hence why the US were taking as much lamb as we could process," Mr Brown said.
"Prices are now back to 935c/kg cwt, still more expensive than our lambs, but not by nearly as much."
However business analyst at Meat and Livestock Australia Tim Jackson said the US remained the largest market for Australian lamb, with exports increasing 18pc year-on-year to 6,794 tonnes.
Chilled exports rose 1pc to 3117 tonnes, while frozen exports rose by 37pc to 3,678 tonnes.
"Among large markets, the largest volume changes were seen in South Korea and Papua New Guinea," Mr Jackson said.
"Lamb exports to South Korea rose by 149pc year on year to 2194 tonnes, while exports to PNG rose 110pc to 2320 tonnes.
"Strong lamb exports to South Korea and PNG throughout 2022 have made them the third and fourth largest lamb export markets, further contributing to the diverse export base of Australian lamb."
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Mr Brown predicted there shouldn't be too much pressure from export prices on lamb values yet, but there was a lot more upside when US lamb prices were running hot, which has now dissipated.
"So far the fall in US lamb prices hasn't really impacted imported lamb values," he said.
"The higher value rack price dipped a little in September, but has recovered most of that to remain well above last year's levels.
"Legs are cheaper than last year, and earlier this year, which will be taking some of the cream off processor margins."
Meanwhile, Australia exported 25,026 tonnes of lamb in September, down 4 per cent from August, but up 15pc year-on-year.
Frozen exports rose 22pc year-on-year to 18,246 tonnes, while chilled exports fell 2pc to 6,780 tonnes.
So far in 2022, Australia has exported 212,032 tonnes of lamb, 5pc more than the first nine months of 2021.
