Australian and New Zealand lamb outlook 2025: Strong prices and Australian seasonal optimism

• Australian sheep producer sentiment significantly rebounded in 2024.
• New Zealand lamb processing expected to decrease by 6.5% in 2024-25.
• Early-season lamb prices in both Australia and New Zealand are significantly higher than last year.
• Potential for shifts in global trade flows as China shows signs of economic recovery.

The Australian lamb industry has experienced a remarkable turnaround in producer sentiment over the past year. According to the latest Sheep Producer Intentions Survey (SPIS) by Meat & Livestock Australia (MLA) and Australian Wool Innovation (AWI), producer confidence surged from 18% in October 2023 to 58% in October 2024, with a majority of farmers expressing a positive outlook on the Australian sheepmeat sector.

This improved sentiment is largely driven by better prices for lamb and mutton, as well as improving seasonal conditions in key regions. However, issues such as the cessation of live sheep exports, tough market conditions, and dry seasonal weather continue to weigh on confidence.

Lamb flock dynamics are also undergoing change, with prime lambs overtaking Merinos within the 27 million lambs reported on hand by producers. Prime lambs now account for 38% of the national flock, while Merinos have fallen to 35%.

Despite the rebound in sentiment, the overall lamb supply for 2025 is projected to decrease slightly, with an expected reduction of approximately 250,000 lambs, a 1% drop from 2024 levels. This modest decline reflects varying regional conditions, with New South Wales leading growth while drier weather in Western Australia and South Australia contributes to contraction.

New Zealand's lamb outlook for 2024-25 presents a mixed picture. North Island farmers plan to increase first quarter processing by 2.4% compared to the same period last year, buoyed by favourable pasture conditions and strong early-season prices. In contrast, South Island processing is expected to decline sharply by 22%, driven by fewer trading hoggets and slow grass growth.

Nationally, the total number of lambs processed in the first quarter of 2025 is forecast to drop by 11.1% year-on-year to 3.9 million head. The decline is largely attributed to lower stock availability in the South Island, particularly in drought-affected regions. Despite a slow start, processing numbers in the South Island are expected to recover later in the season as new season lambs become available.

Yet, early season farmgate prices in New Zealand are significantly higher than last year, reflecting tight early-season supply and a strategic shift by exporters towards higher-value markets in Europe and North America, away from a dominant reliance on China.

The outlook for Australian and New Zealand lamb markets in 2025 is cautiously optimistic. In Australia, improved sentiment and favourable early-season prices suggest that producers are hopeful for a profitable year ahead. However, supply constraints, particularly in Western Australia and South Australia, may temper overall growth.

In New Zealand, while early season prices are promising, the forecast 6.5% decline in total lamb processing from 18.2 million head in 2023-24 to 17.0 million head in 2024-25 highlights ongoing challenges. Additionally, adult sheep processing is projected to decrease by 10.6% to 2.8 million head, reflecting efforts by farmers in drought-affected regions to retain breeding ewes.

Global trade dynamics are shifting, with exporters in both countries focusing more on higher-value markets in Europe and North America, with this trend likely to support prices through 2025.

Additionally, optimism about recovering Chinese demand is a crucial factor in the 2025 Southern Hemisphere outlook. Should China’s economic rebound continue, demand for lamb exports from both Australia and New Zealand could surge, benefiting producers and bolstering farmgate prices.

For UK farmers, the ripple effect of increased Chinese demand might translate into greater stability in European markets, with reduced supply from Oceanian exports, as they seek markets closer to home. Check out our recent report on the Global lamb market to read more.

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