Some of the most clicked articles are the ‘crystal ball’ predictions of what markets will do in the future. Livestock producers love an opinion, and the best thing for the author is it that it takes some time before you are proven right or wrong, and most readers have forgotten what you said by then anyway.
For the record this time last year we pegged the Eastern States Trade Lamb Indicator (ESTLI) at a 650¢/kg cwt average, mutton at 300-400¢ and we didn’t have a stab at cattle.
The lamb forecast was a little on the lean side, with the ESTLI averaging 740¢ for the year to date. A strong second half performance, driven by increased slaughter capacity and demand has seen lamb prices lift this year.
Figure 1 is our go to chart for forecasting average prices for the year ahead. The demand curve has shifted to the right, with stronger supply combined with stronger prices. For a price figure for 2025, we need a supply number.
The Sheep Producers Intentions Survey suggests first-half lamb supply will be higher. But we also know that the flock is in decline in the west and at best steady in the east. If we strip 2.5% off supply, it gives an average ESTLI of 780¢ with steady demand. It sounds low given current prices, but is a nice starting point with potential upside.
Mutton is a little more difficult, but with supply potentially easing, price should narrow what is a very large gap to lamb, pushing into the 500¢ range.
For cattle the fact that our prices are heavily impacted by US markets makes forecasting easier in some ways, and harder in others.
Figure 2 is a busy but informative chart that combines Australian cattle slaughter, with the 90CL Frozen Cow indicator.
The 90CL price is driven by US beef supply, and to a lesser extent ours. The price of the Eastern Young Cattle Indicator (EYCI) relative to the 90CL has historically been a function of Australian slaughter.
Over the past few years, we seem to have fallen off the trendline, with a heavier discount than expected by slaughter levels. Drought was the problem in 2019, while slaughter capacity issues plagued prices in 2020 and 2023.
The cattle herd is either in slight decline, or possibly steady, so we can’t expect any big reduction in supply next year. We know however that the state of the US herd means that demand for our beef in international markets should remain strong.
This crystal ball says we should continue to see a steady upward trend for cattle prices, but don’t expect any rapid shifts higher as there are still plenty of cattle out there.
