Exponential growth in the national flock, record lamb production and producer fears driven by media scrutiny of El Nino conditions that did not eventuate are among the key factors that have driven this year's low sheep meat prices, according to Meat & Livestock Australia senior market analyst Ripley Atkinson.
Mr Atkinson made the comments at the MLA Updates forum in Bendigo last week, noting that even though seasonal conditions were not as bad as in 2019, prices were lower and the difference was the loss of confidence.
Prices have been down anywhere between 40 and 70 per cent on last year, while the sheep flock is at 78.75 million head, the highest it has been at since 2007.
"For those of you that remember, that's basically the highest its been since the Reserve Wool Price Scheme was removed... so it's the highest the flock has been in the modern era, which is quite significant," Mr Atkinson said.
"The breeding ewe numbers across the country in April were at their highest point since 2007 as well and lamb numbers this October will be the highest they've been since 2005.
"Already supply is a key factor here as to how significant this flock rebuild has been since 2020.
"The flock has grown from 64 million, or a 100 year low, to a 15 year high within the space of three years."
Mr Atkinson this year would see lamb slaughter records broken, getting close to 23 to 24 million.
"Last year we killed 21.5 million, so in the space of 12 months, there's the potential for lamb slaughter to increase by anywhere from 2 to 2.5 million head, which shows how significant the supply rise has been," he said.
"Production volume is forecast to probably break 550,000 tonnes, the previous record was last year at 530,000t and the record before that was 2016, which was 500,000.
"Higher carcase weights are a key contributing factor but obviously higher numbers are influencing that as well."
Mr Atkinson said intense media scrutiny around predicted dry weather that didn't eventuate had led producers to offload stock that weren't ready for sale.
"That mixed quality in the face of high supply is giving buyers the choice and the opportunity to determine and dictate what they pick out of those sales and because of that, that's reducing demand across the general market," he said.
At a aggregated level, domestic lamb consumption is at the strongest its been since 2016, Mr Atkinson said.
"The four weeks just gone compared the four weeks last year, our lamb consumption through retail markets has increased 10 per cent," he said.
"Price has come down 13pc for those corresponding four weeks 12 months and that's directly translated to increased consumption of lamb.
"In the export markets because we're producing a record amount of lamb, we're also exporting record volumes and basically every month this year lamb exports have cracked records consecutively.
"Mutton exports also are not records, but performing very strongly.
Mr Atkinson said the lift in the market over the last four weeks had been driven by confidence coming back "which shows how influential that can be".
"The last month, basically widespread from Roma right down to southern Victoria and the eastern seaboard and parts of WA as well, we've gotten some rain and it shows how quickly the market can turn around, but for the time being, we are expecting prices to remain sort of subdued," he said.