THE lamb market has returned to its traditional spring price dip but producers are still sellers even as much of southern Australia looks for rain.
The national trade lamb and heavy lamb indicator closed at 386 cents a kilogram last week, 80c to $1 below prices for the same period last year.
If and when prices will begin to rebound remains to be seen.
But at the South Australian Livestock Exchange and Naracoorte saleyards on Tuesday, prices quoted firm to a few dollars dearer, bringing some hope.
There has been a trend towards over-hooks selling of new-season lambs, with weekly slaughter rates in SA up 28 per cent compared with 2011.
In the week ending September 20, figures from the National Livestock Reporting Service shows 68,876 lambs were sold over-hooks in SA compared with 61,375 for the same week last year. Yardings dropped from 25,741 head in 2011 to 17,276 head.
Meat & Livestock Australia manager of market information and analysis Tim McRae said the world wanted Australian lamb, but it was limited in what could to pay for it.
Mr McRae said 30 per cent of the price drop could be attributed to last year's exceptional prices with the remaining 70pc because of increased supply and weak demand.
He said the financial concerns of the European Union had seen New Zealand redirect more of its lamb into the Middle East which was impacting on the price exporters were able to get for Aussie lamb.
Mr McRae said the strength of the Australian dollar was continuing to be a handbrake.
"Consumers are looking for cheaper sources of protein and for lamb, which is already a relatively expensive product, it is causing a world of issues," he said.
"We had no doubt that exporters had the ability to take additional volumes but hopefully, it is just in the short term that they are not in a position to bid high prices on the product."
In its mid-year projections, MLA forecast lamb supply to grow 7-10pc as a result of flock rebuilding and a run of good seasons.
Elders Naracoorte livestock manager and Naracoorte combined agents chairman Tom Dennis said South East producers were well into selling, with a large percentage of lambs sold over-hooks.
"Because of the way the season is shaping up ( like last year) we are in a real sell mode and with the high grain prices there is not the appetite by restockers to put the lighter weight lambs out," he said.
"We are seeing the lighter lambs going to slaughter or going into abattoir-owned feedlots."
Mr Dennis said kill space was tight, restricting the flexibility graziers had to make selling decisions.
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