TOM'S MARKET MUSTER: Lamb traders eat up volume, US beef storage low

Indian Ocean Dipole warming impacting a drier Summer

The month of January has seen most Australian livestock indicators trend downwards. This is not surprising with hot dry conditions throughout much of the country.

The Indian Ocean Dipole (IOD) has warmed throughout the last three months. (The IOD offers an insight into Australian weather conditions - positive IOD is associated with lower rainfall in the central and southern Australia, whilst a negative IOD is associated with increased rainfall the eastern Indian Ocean is warmer, it leads to increased rainfall across parts of Australia).

The IOD has warmed at the months end from -0.54 degrees Celsius in November, to -0.30 at the end of December, to -0.06 at the end of January. Couple the warm weather with strong volumes on offer, has led to the softening of most markets.

Australian Livestock Indicators soften in Jan

After closing the calendar year of 2024 sitting at 693c on the December 23, the MLA Eastern States Young Cattle Indicator has taken some turns in 2025. Off the back of the early Southern Weaner Sales, the indicator has risen 2% to close off on January 9, 2025 at 705c. Since than, the indicator has dropped 4% week-on-week to currently sit at 641c (January 30, 2025).

The indicator has had 71c (10%) range already for 2025, across all of 2024 there was only a 144c (21%) range. Overall hot weather and producers happy to take current values has spurred large numbers onto the market, which has seen a softening of most livestock markets.

US Cold Beef Storage 10 year low

Figures from the US Department of Agriculture (USDA), shows that the US Cold beef storage is currently at a 10 year low, where 2024 saw 5,178 million pounds of beef in storage across the year - the lowest since 2014.

Looking at the last 10 years, 2024 is a significant outlier. The most recent three quarters being June, September and December Quarters for 2024, are all within the top 10 of smallest quarters for cold beef storage.

Australian inflation four-year low

On a business front, Australia's Consumer Price Index has fallen from 2.8% to 2.4% for the December quarter - generating buzz around RBA rate cuts, (to note CPI includes government-rebated electricity bills, potentially masking actual reductions in consumer spending).

Another look is the Annual Trimmed Mean - which aims to take into account temporary price movements of goods including - fuel, fruit and vegetables, as well as holiday travel and accommodation.

The Annual Mean looks at underlaying inflation fall from 3.2% for November, to 2.7% in December - the lowest its been in four years since December 2021. An Agricultural lens on the above see's an overall softening of inputs at the farm gate level impacting the cost of production and profitability

Lamb traders eat up volume

Almost 180,000 lambs have been offered online on AuctionsPlus for 2025, 49% of that Crossbred mixed sex and wether lambs. The AuctionsPlus Crossbred Lamb indicator has held ground sitting above $117/head across the month.

The combination of 88,000 Crossbred lambs and hot weather across the month has tested the market, but lamb grids are currently remaining above 800c - there is a strong appetite for lamb trading. Furthermore, the store lamb clearance on AuctionsPlus for January on AuctionsPlus sitting at 73%. 

SOURCE: AuctionsPlus, Australian BoM, ABS, MLA, USDA