Domestic Lamb

Lamb producers’ retail share lifts, but for how long?

Sheep Central, February 2, 2024

TEMPORARY discounting of lamb in Australian supermarkets and rising saleyard prices in late 2023 lifted the producer share of the retail dollar, but beef did not fare as well.

According to data released by Episode 3 analyst Matt Dalgleish yesterday the saleyard lamb index lifted by 8 percent from 255 to 276 during the final quarter of 2023.

At the retail level, the lamb price index posted a sharp 12pc drop from 289 to 254. This discounting of lamb at the retail level equated to a fall in average retail lamb pricing from $18.49/kg in Q3 2023 to $16.25/kg during Q4, Mr Dalgleish said.

The release of quarterly Consumer Price Index (CPI) data from the Australian Bureau of Statistics (ABS) provides the opportunity for Episode 3, in conjunction with Beef Central and Sheep Central, to update the producer share of the retail dollar calculation.

Mr Dalgleish said during the final quarter of 2023 saleyard cattle prices continued to ease, with the saleyard cattle index slipping nearly 17pc from 314 in Q3 to 262. Over the same time frame the retail beef index eased marginally from 266 to 262. This slight drop in the retail beef index equates to a decline in average beef prices at the supermarket/butcher from $26.19/kg to $25.80/kg over the December quarter.

However, both the most recent analysis show that the producer share of the retail dollar for lamb and beef producers is at a similar level to where it was in 1998. Also in most cases the fall in retail prices for lamb were advertised as being short-term.

Mr Dalgleish said the retail price drop in lamb in late 2023 was driven by some short-term pre-Christmas discounting and he did not believe the lift in retail price share for producers would be long-lived. Trade lamb prices peaked in mid-January at 775c/kg cwt, but have lowered since then in saleyards and retail prices have rebounded, he said.

“It’s not uncommon for lamb to be used at the retail level as a tight-margin product to get people in the door at certain times — Christmas and New Year.”

The next analysis will be done in March.

Source: Episode 3.


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