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Saleyard lamb prices decline after summer of highs, supermarkets costs tipped to stay high

Merino lamb prices have dropped nearly 30 per cent since the end of January. (Supplied: Emma Brown)

After holding up in the face of plunging cattle values, lamb prices are beginning to drop at a fast pace.  

But if you love a leg of lamb, you should not get your hopes up for cheap lamb deals, as shoppers might face a six-month wait for supermarkets to pass on this farmgate price drop.

According to Meat and Livestock Australia's (MLA) Eastern States daily indicators report, Merino lamb prices have dropped nearly 30 per cent since the end of January to 482 cents a kilo, while light lamb values have dropped 21 per cent to 554 cents per kilo. 

At the Ballarat saleyards on Tuesday, MLA market reporter Sheona Lamb said there was a "significant price drop through most categories" with only the heaviest 26-kilogram lambs making over $200 a head.

There were similar price drops at Corowa's sale on Monday, with medium to heavy trade lambs down $9 to $12 each and making between $137 and $184 per head, while extra heavy export lambs were up to $27 a head down on the previous sale. 

After a summer of strong lamb prices, the market is beginning to dramatically drop. (ABC News: Courtney Bembridge)

Ms Lamb said farmers at the Ballarat sale were in a sombre mood.

"Producers weren’t that happy prices have come down week on week," she said.

She said the supply of lambs was a factor — with many cropping operations needing to offload lambs to get ready for sowing and abattoirs were full.

 "All the meatworks are full, and not needing lambs at the moment," Ms Lambs said.

Three to six-month wait on lower lamb price

Industry analyst from Episode 3, Matt Dalgleish, said despite the dip in prices for producers, meat prices were expected to remain high on supermarket shelves for months.

He said while sheep slaughter rates were up on last year, the supply was even higher.  

"In Victoria if you look over the past four weeks or so, slaughter volumes are up about 17 per cent and yardings are up 22 per cent higher than this time last year.

"But sometimes you don't see that reduced trend at a retail level for three to six months, so I can't expect that we're going to see significant deflation."

Matt Dalgleish says although lambs prices in the saleyards are falling, consumers can expect high prices for cuts on supermarket shelves. (ABC Rural: Jane McNaughton)

But Mr Dalgleish said there had been some relief for shoppers, as according to monthly Consumer Price Index (CPI) reports released by Australian Bureau of Statistics, meat and seafood prices decreased slightly in February.

"Those ongoing price hikes have started to moderate and the momentum is shifting," he said.

Mr Dalgleish predicted a drop in retail meat prices would be likely "in the second quarter of the year".

"But that might coincide with sheep and lamb pricing at the saleyards starting to climb again coming into the winter period when supply starts to dwindle, that's when we usually see the price peaks."

Colac butcher drops meat price

Butcher at Midwest Meats in Colac and sheep farmer Justin Cashman said it was typical for lamb prices to drop coming into autumn, but this year the market was particularly uncertain for sellers.

To create some certainty, Mr Cashman said he was buying lambs for the butcher from his own farm.

"It's an insurance policy I suppose you could say — I'm hesitant to put them into the yards," he said.

Justin Cashman has started to reduce the price of lamb at his butcher store, to reflect the market. (ABC Landline: Pip Courtney)

"I'm happy to keep doing this for the moment just to keep the price up there but I don't think that's going to be the case for the next few weeks."

Mr Cashman said selling privately to butchers was giving farmers a return of around $200 for a 24-26-kilogram animal.

Unlike the major supermarkets, Mr Cashman said he has began lowering the price of lamb and mutton in his business.

"Supply and demand dictates what you have to do, otherwise we'll get a build-up in the shop too," he said.

"People are going towards cheaper cuts, when things get tough [for consumers] we still sell the same volume of meat but they just go for the cheaper cuts and we're certainly noticing that now."

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