Domestic panic buying of meat hasn't offset uncertainty caused by coronavirus in key sheepmeat export market with the National Trade Lamb Indicator dropping by 31 cents in the past week to land on 897c a kilogram on Tuesday.
While all the national indicators have lost ground most remain at levels more than 200c above year-ago levels.
Abattoirs were humming last week the lamb slaughter in the eastern states jumping 19 per cent to 338,860, driven up by a 28pc hike in Victoria to 192,084 and a 11pc leap in NSW to 101,122.
The rise in the mutton slaughter was only 4pc to 81,317 which included a 12pc increase in NSW to 34,394 and a 4pc lift in Victoria to 35,427.
Lamb prices softened at selling centres across Victoria, South Australia and NSW although yardings were down at some major saleyards including Ballarat on Tuesday where numbers dropped by 4280 head to 28,785.
But that didn't stop prices drifting down by $15 to $30 with heavy lambs dressing over 30kg topping at $288.
Lamb prices also continued to back-pedal at Monday's Bendigo sale with more signs that worried producers are keen to offload stock before coronavirus triggers more problems in the market.
Agents were surprised by the size of the yarding - 26,877, only marginally fewer than last week - with most categories $15 to $30 cheaper.
Lamb numbers more than halved at Naracoorte on Tuesday to 6043 but prices still tumbled by $20 to $30 across the market. Restockers were virtually absent from the sale.
Forbes lifted its lamb numbers to 17,000 on Tuesday, up almost 1000, with trade weights cheaper by $10 and more in places while heavy and extra heavyweights were $15 easier.
Lamb numbers weren't a problem at Dubbo on Monday with a yarding of only 5230, down by 3010 on the previous sale.
Lightweight lambs to the processors were firm with the 12kg to 18kg 2 scores selling from $146 to $176. Lighter trade lambs were $4 easier while heavier trade weights were firm.
Phin Ziebell, National Australia Bank's senior agribusiness economist, said the recent record spurt in lamb prices had been triggered by rain in the eastern states.
He said lamb prices had probably peaked for now in the absence of more good rains in the past two weeks and coronavirus continuing to impact on major export markets including China, the US and the Middle East.
"While China still needs protein following African swine fever, export logistics are going to become more difficult," he said.
Mecardo analyst Angus Brown said panic buying was supporting domestic lamb prices while panic selling was depressing export prices.
He said compared with some markets, red meat had been largely spared with recent rain and lack of stock providing a buffer.
He warned that any sustained sell-off of lambs in coming weeks over fears about the strength of export demand as countries cope with Covid-19 may worsen expected lamb and mutton supply problems this winter.