Domestic price of lamb

IBISWorld forecasts the domestic price of lamb to surge 18.1% in 2025-26, to 870.0 cents per kilogram. Sheep meat production is expected to fall sharply in the current year, as turnoff rates drop. Total sheep numbers bounced back strongly over the three years through 2022-23. This factor, along with the onset of drier conditions in key sheep farming regions, encouraged record turn-off rates over the two years through 2024-25. With total sheep numbers reaching a four-year low in 2024-25, sheep farmers are entering a flock rebuilding phase in 2025-26, reducing the supply of lamb and lifting prices.

Domestic lamb prices typically fluctuate from year to year. When farmers increase their turnoff rate, this reduces the size of the national sheep flock, which limits the number of lambs that can be born. A reduced supply of lambs typically causes the domestic price of lamb to increase. However, flock expansion can also cause prices to increase, since farmers keep lambs to raise them to become breeding or wool-producing sheep, which limits the number of lambs available for slaughter. Domestic lamb prices are also influenced by export demand. For instance, farmers can divert stock away from domestic markets when export demand is high. Therefore, local players have to compete on price with international buyers.

Wool prices and production can also influence lamb prices. When wool prices are relatively higher than the price of lamb, farmers are encouraged to expand their flock to increase wool production and benefit from these more attractive returns. This typically limits the supply of lambs for slaughter, which pushes lamb prices upwards. However, when lamb prices increase more quickly than wool prices, farmers will often return to meat production, increasing the supply of lambs for slaughter and consequently depressing lamb prices.

Lamb meat has fallen out of favour with Australian consumers, with per capita consumption more than halving since 1994, according to ABARES. Alternatives such as poultry and seafood have become big competitors to red meat, largely due to health and price concerns. However, growth in demand for Australian lamb from overseas markets has expanded over the past five years. Greater local supply has weighed on domestic lamb prices. Subdued demand conditions due to the pandemic weighed on demand for sheep meat, causing prices to fall in 2020-21. Overall, IBISWorld anticipates the domestic price of lamb to climb at a compound annual rate of 4.8% over the five years through 2025-26.