Conflicting messages as lamb prices soften

Direct to works lamb processing slots have blown out until April.


Sheep
CHOCk-A-BLOCK: Agents are being questioned as to when the projected shortage in the lamb supply take hold as kill spots push out to April.

CHOCk-A-BLOCK: Agents are being questioned as to when the projected shortage in the lamb supply take hold as kill spots push out to April.

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A growing differential between direct to work lamb price schedules and the physical marketplace has been a hot topic of conservation

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The alarming differential between direct to work lamb price schedules and the physical marketplace is a hot topic in saleyards.

With the gap now reaching as high as 100 cents a kilogram on heavy weights, fears are now being aired by concerned vendors that buyers, like in prime cattle markets, consider the saleyard markets as their last place of procurement while their larger suppliers fight for the majority of kill space.

Lamb prices have hit a six-month low, with the Eastern States Trade Lamb Indicator averaging 647 cents a kilogram carcase weight for the last week. 

Meat & Livestock Australia latest projections for the remainder of the growing season forecast a substantial decline in lamb slaughter of 7 per cent in 2019 to 21.2 million head, the lowest number since 2012. 

MLA predicts the slaughter of sheep was now expected to tumble by 16pc to 8 million head, underpinned by a dramatic fall in marking rates and the extensive culling of ewes and lambs due to the drought.

Despite this, in this initial closing period of summer – where seasonal conditions are deteriorating and feed costs continue to escalate –  even the opportunities for direct to work spots have shot to a premium with the earliest slots available in April.

Agents are reporting the challenges in managing these market conditions. They are conflicted by whether they advise producers to commit to the race for kill spots or wait for the supply pressure to ease – and will it?

MLA estimated the national flock declined by more than four million head or by 6.1pc to mid-2018. A further dip of 3.7pc by mid year is expected, to 65.3m head, as producers readjust to the season and await for a turnabout in the weather – unlikely conditions for Victoria according to the weather bureau

With the weather conditions as they currently are, agents are concerned April seems a very long way away for producers, but if the projections are correct, June, July and August must seem like an eternity away for processors.

National Livestock Reporting Services stated competition from processors remained irregular at Bendigo on Monday, with some not operating and others not purchasing to capacity.

After a soft opening, Bendigo market improved to record a slightly stronger trend compared to a week ago.

The sale highlight was restocker competition, with volume orders from Swan Hill, Wycheproof and Lake Cargelligo, NSW, buoying the main lines of store lambs $10 to $20/head dearer.

In its analysis of the Wagga Wagga, NSW market on Thursday, NLRS said heavy lambs sold from 530-650c/kg, with the lower end now being mentioned as the “spot” price if producers were desperate to sell.

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