What's in store: Confidence down?

GAUGING by the small attendance at the most recent Wycheproof store sheep sale, there seems either to be a lack of confidence in the season or a huge plunge in faith has developed in the sheep and lamb markets to deliver stable and rewarding prices.

Either way both crossbred and Merino ewes were extremely good buying at the north-west market centre on Friday and were heavily discounted on the ruling rates of last spring when prices were constantly perched in the $150-$200 a head range.

As a result of this perceived dip in confidence, joined young crossbred ewes that were well-grown, mulesed, vaccinated with Gudair and joined for an April-May could manage at the best $128 a head.

Likewise, rising one-year-old crossbred ewe lambs, autumn 2012-drop, also mulesed, OJD-vaccinated and ready to join immediately to a ram of choice also suffered badly as they mostly made $85-$100, with one isolated sale topping the entire market at $132.

These prices were at least 30 per cent below the selling rates of three and four months ago.

They represent a huge saving of about $40-$50 a head compared to 2012 spring and at a time in the year when January prices are nearly always dearer than the previous spring.

The buyers who participated in this sale were also keener to purchase wool-cutting Merino ewes (on the bounce in the wool market) than quality-bred crossbred ewes, when previous drops of lambs have averaged 340c/kg during the December quarter of this year and 150c/kg below the same period in 2011.

Merino ewes joined to terminal sires also seemed to meet better demand compared to those joined to Border Leicester rams.

However this wasn't strictly the case all the time as one line of 3.5-year-old Merino ewes - proven breeders - with an August-shorn skin and joined to Poll Dorset rams failed to clear the $90 a head mark.

These appeared cheap but were not the only pens of Merino ewes not sold on the day as vendors began saying no to current store market valuations that have emerged this January.

On the positive side of the prime lamb agent sources have welcomed an offer of forward contract prices for March and April released by major supermarket, Coles, this week.

Prices of 430-440c/kg have been offered with a 50pc upside clause, meaning the processor has agreed to pay half any rise in the market at the agreed time of slaughter.

Coles national livestock manager Dale Pemberton says the offer has gained reasonable acceptance.

"The supermarket requires 30,000 lambs national each week," he said.

"The weather has determined there will be a lack of quality as the season heads into winter and as a retailer we need to provide the direction and incentive."

Contracted Coles lambs must be of a specific type and be finished on a ration of grain for six weeks before slaughter, he said.

Elders' southern zone livestock manager Peter Tuohey, who attended the Wycheproof sheep sale, agreed current low livestock prices coupled with the long dry spell has plunged producer confidence to the lowest levels he has seen for some years.

The former Charlton feedlot buyer believes if people can afford to purchase livestock, and hold them until the break in the season, there are huge money-making opportunities to be had: the greatest he has seen for some time.

"Exporters and producers have learned to live with the Australian currency at its current level of $1 to $1.05 for more than two years now," he said.

"Livestock have presenting extremely well at each sale I attended this year.

"However I don't think people are appreciating and valuing this quality, either in finish or the breeding of the stock.

"It's the best we're seen in years, and it is the case for cattle market as well as for sheep.

"The current season, however with its acute dryness, has determined there will be an absence of quality heading into the winter months.

"This will create finishing opportunities for those who move and take advance of this situation.

"I've seen a lot of cattle markets recently, and over the years, and prices now are as attractive for restockers as they have even been. And those with a mind to supply quality livestock as the season turns will be rewarded."

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StockLand
Markets PulseStock & Land markets analysts Murray Arnel and Peter Kostos keep you up to date with the latest news from around the saleyards.

COMMENTS

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Katrina - that doesn't answer my question, Australia is trying it's best to educate these
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One of the best decisions an Australian government has ever made. When you have to resort to
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I think we have bushie boy worked out argis. A know it all city slicker.