Tighter yardings expected to drive up lamb demand

Lamb yardings eased by 47 per cent, while sheep yardings were down 50 per cent amid the Anzac Day shortened trading week.

Mecardo market analyst Angus Brown said the market typically began to see a substantial reduction in supply in the second half of May and into June.

"We probably don't expect to see it for another couple of weeks but the fact that price has stopped falling and supply is sort of steady is probably a good sign that things might tighten up from the second half of May," he said.

"This time last year the lambs were still flowing very strongly and they kept flowing strongly so we're expecting to see something a bit different from that.

"This time of year it gets harder and harder to finish lambs so heavy lamb is the category that will get tighter quicker... there will still be unfinished, light lambs out there but the finished lambs will be the first ones to move."

The heavy lamb indicator is now at 694c/kg while trade lamb is commanding 673c/kg.

Mr Brown said record weekly slaughter numbers on the east coast showed that export demand was quite strong.

"If supply does ever tighten up, there should be some room for prices to move," he said.

"No one really knows how many lambs are out there and they're going to come in over the next couple of months, which will determine what prices do."

Meanwhile in Bendigo this week prices rose for light lambs suitable for Muslim kill orders amid reports that air freight issues sparked by the recent escalation in conflict have now been resolved.

"They've been taking a lot of lambs in that segment of the market this season, so we're hoping that continues because it's really put a floor under the price of those light lambs," Mr Brown said.

Western Australia continues to struggle, with drought and a lack of processing availability depressing the market, resulting in a 160c discount for light lambs compared to the national indicator, sitting at 556c.

The light lamb indicator is performing most strongly in Victoria at 603c.

Meanwhile heightened lamb supply is impacting supermarket pricing, according to the latest data about the consumer price index from the Australian Bureau of Statistics.

Lamb and goat price dropped by 16.8 per cent in the most recent quarter, following a 15 per cent fall the previous quarter.

ABS head of prices statistics Michelle Marquardt attributed the fall in red meat prices to "increased supply and discounting".