Australian Bureau of Statistics (ABS) data for May reported national lamb slaughter at 1.45 million head, 33 per cent below year-ago levels and the lowest monthly slaughter since January 2012.

The data showed that all states recorded significant reductions from year-ago levels, with South Australia throughput easing 40 per cent from May 2019 to 158,250 head.

NSW and Victoria slaughter reported declines of 18 per cent and 35 per cent to 387,300 and 710,600 head, respectively.

Meat & Livestock Australia (MLA) said despite the widespread rainfall earlier in the year, competition in the store market between restockers and processors remained robust, pressuring the availability of finished lambs.

ABS indicated that national sheep slaughter halved from year-ago levels to 325,900 head in May, the lowest since July 2016.

MLA said with the exception of January, national sheep slaughter had been tracking well below 2019 levels so far this year, as increased stock retention and two sizeable turnoff years in 2018 and 2019 limited the volume of sheep available for processing.

MLA said subdued sheepmeat production had placed downward pressure on exports, with sheepmeat export quantities tracking considerably below 2019 levels.

Thomas Foods International livestock manager Paul Leonard said they expected there to be not only more lambs than the previous 12 months, but for the quality to be better than there had been in the past few years.

"What lambs that are available in the next few months will be prime," Mr Leonard said.

He said in the past few years, only some lambs on the market had been at the killer stage, while a substantial percentage were still feeders.

This year most on offer should be ready to be processed.

In the physical saleyards, lamb supply recovered at Bendigo on Monday from its extremely low levels of previous weeks to push up to 10,000 head.

Buying, however, was impacted by COVID-19 outbreaks at some Victorian meatworks and winter slowdowns at others.

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And on Tuesday at Ballarat, lamb supply was up to around 9000 head yarded, with the quality reported as plain to very good.

It was reported that not all of the usual buying group attended, with demand weaker across all weights and categories and resulting in prices dropping $20 to $35 a head to over $40 in places.