Some Nasty Lamb Spreads
Market Morsel
A few years back during the strong Australian flock rebuild we saw local lamb prices narrow the gap between offshore counterparts, particularly for lamb from the northern hemisphere. However, since mid-2021 the gap between lamb prices in the northern hemisphere versus the southern hemisphere have widened significantly.
The Australian lamb market collapse in late 2023 saw Aussie lamb drop to the cheapest of the five nations featured, even running at a strong discount to Kiwi lambs for several months when prices dipped sub 500AU cents per kilogram. So far in 2024 the monthly average Australian lamb price has recovered to trade above its Kiwi counterpart, sitting about 100 AU cents higher as of the end of June 2024. However a continual strong surge in northern hemisphere lamb prices from the USA, UK and the EU since late 2022 has seen current monthly average Aussie lamb price running at levels that are between 600 – 800 AU cents below lambs from the northern hemisphere.
Analysis of the average monthly price spreads in percentage premium and discounts paints a vivid picture with the market crash in late 2023 pushing Australian spreads to a 40% discount to New Zealand lamb prices and towards a 60% discount compared to northern hemisphere lamb. In 2024 Australian lamb spread to Kiwi lambs have returned to a premium, presently sitting at 16% above New Zealand lamb levels.
However, compared to the USA they are 45% lower. The picture is even worse across the Atlantic with June 2024 Aussie lamb price discounts to the EU at 49% and to the UK at 52%.
