MLA stated rising prices for wool is causing some producers to retain stock, despite the Bureau of Meteorology (BoM) predicting a drier than normal winter.
This retention of ewes and wethers will continue to affect supply for the foreseeable future, and potentially see new record prices set for sheep and lambs.
Cattle producers are facing a similar situation, although prices may not reach the record highs seen throughout the spring of 2016.
I have watched with interest how cattle supply has been, leading up to the Easter holiday break.
With Easter falling at the later end of the calendar spectrum, it has created, alongside Anzac Day, three weeks of short markets.
While there has been some good rain across much if the eastern seaboard, many areas have fallen short of March and April averages, and are looking for further rain to have any decent sort of autumn.
With the BoM’s bleak predictions for winter and these three short working weeks should see larger supplies of both sheep and cattle, rather than the small markets seen so far.
It has been said for many years that price is the best agent, and with livestock prices being so high right through spring and summer, producers have already sold stock to trap these higher prices.
This trend has been seen right throughout store sales of sheep and cattle, as evidenced in all of Stock & Land’s market reports over the past six or seven months.
These sheep and cattle have already been sold, and will not come back on the market until well into spring of 2017, or even early 2018. Once again the Mother Nature will be the determining factor on the final outcome.
With several sheep and cattle sales cancelled last Thursday, because of the Easter break, processors could well be re-accessing their price grids for the coming months. If this process shows insurmountable losses, they may well close down for an indeterminable period.
Producers are less considerate of any price adjustments into the future, as they are driven by prices they are receiving for their livestock, currently.
Physical sales, and sales direct to processors are high, and this is influencing livestock to be sold, because of the high dollar return.
Attending store sales, both cattle and sheep, has become a must for producers, but also as a spectator sport too. When one cast their minds back to the days when prices were very low, attendances at store sales was low. Now, producers come to store sales happy to see how prices remain high.
In last week’s Prime Talk, I wrote about prices from 1964, 1969 and 1974, from the Newmarket sales, and i have been trying to work out a formula for conversion to today’s prices.
A very simple way of doing this was matching wages then, to now, and matching this with cattle prices. Back then wages in the livestock industry were around $50 per week, and compared to 2017, this is a 60 per cent increase.
Match this with the top bullock price in 1974 of $314, today bullocks should be making close to $6000. A similar ratio can be used on all livestock, and one has to ask, where has it all gone wrong.