Vast areas of Australia's sheep production zones are grappling with challenging seasonal conditions, according to ANZ's latest Agri InFocus report. These difficulties are reflected in national mutton throughput and slaughter rates.
Producers face the decision of whether to continue feeding or to offload breeding stock ahead of the 2025 winter season. The combination of high prices and the challenges of providing sufficient feed and water is prompting many to sell their stock. As a result, mutton slaughter has increased by 8% year-on-year up to April, following a high throughput year in 2024.
Alanna Barrett, ANZ Associate Director of Agribusiness Research, highlighted the impact of persistent dry conditions on the industry. She warned that another tough winter could be on the horizon. "The volumes of mutton being processed, particularly from areas where dry conditions have persisted the longest, including South Australia and Victoria, are likely to be rapidly reducing the core breeding flock for both the year ahead but also into 2025," said Barrett. She noted that "the flow on effect won’t be seen until August/September when the volume and quality of new season lamb becomes apparent."
The report also indicates a decline in total lamb and mutton volumes from Western Australia due to federal legislation set to cease live export of sheep by 2028, which is driving a structural shift away from sheep production in that state.
Current market conditions favor producers with prices significantly higher than last year. The National Mutton Indicator shows an increase of over 80%, while finished lamb prices continue upward trends.
Export demand remains strong with China leading growth statistics for lamb exports at 9% year-on-year growth for Q1 and mutton volumes increasing by 15%. The United States maintains its position as the top market for Australian lamb exports despite only recording a modest growth rate of 4%. Other markets such as Malaysia and the UK have shown more substantial increases at 33% and 78%, respectively.
"Despite incredible trade uncertainty between China and the US, two major export partners of the Australian sheep industry, demand for Australian sheep meat has remained highly resilient," said Barrett. Domestically, challenges persist for sheep producers; however, those able to endure may benefit this year as global demand continues strong.
Further details can be found in ANZ’s Agri InFocus Commodity Insights report for winter 2025.