Category: Sheep

Sheep and lamb markets were all over the place this week, with large price movements up and down depending on state and category.  Variable price trends were in part driven by supply fluctuations, of which sheep seems the most interesting.

Figure 1 shows the rapid increase in sheep slaughter over the past month.  This is a sure sign of moisture stress for sheep growers.  Lambs can’t be offloaded as they are not ready, so it is sheep which are hitting the market, most likely wethers.  Sheep slaughter for the week ending the 28^th July was the more than double the same week in 2016, and the highest level since 2013, but only marginally beating 2014.

Another measure of supply, lamb yardings, moved in the opposite direction this week.  Figure 2 shows a dramatic fall in lamb yardings this week, with 45% fewer lambs yarded on the east coast.  It could have been last week’s drop in price seeing smaller yardings.  However there is likely to be a dearth of lamb supply in general, as old season supply ends, and suckers are yet to reach minimum weights.

The weaker supply saw a bounce in the ESTLI (figure 3), largely driven by NSW, to 596¢/kg cwt.  WA remains the price leader for lambs with the WATLI at 660¢, and has also achieved the highest price for mutton, at 418¢/kg cwt.

East Coast mutton values were up in SA and NSW, but lost ground in Victoria, with supply no doubt driving prices.

The week ahead

The rain over the last week, and that forecast for the next few days will provide some welcome relief for sheep producers.  It’s not likely to be enough to improve lamb growth rates, but could weaken the supply of sheep in the short term.  Either way there should be some support come for sheep and lamb values in the short term, but the medium term trend will continue to be down.

It was a brief rally, which came to an abrupt end this week, as lamb markets crashed across the east coast this week, except in the west.  It was a supply driven slump, and sheep markets joined in, also tanking.  It would seem we have seen the last of prices with a 6 in front for a while, but weather could have a say in the short term.

The last of the strong prices for 2017 seems to have drawn out the last of the old season lambs this week.  Figure 1 shows a sharp jump in lamb yardings this over the last two weeks, with nearly 172,000 head yarded this week.  Given the lower slaughter space on offer at the moment, it was enough to send prices sharply lower.

Figure 2 shows the ESTLI falling back to its recent lows, finishing Thursday at 576¢/kg cwt.  There was more action in light lambs, with the National Light Lamb Indicator losing 10% and hitting 540¢/kg cwt.

We can see in figure 3 that the light lamb indicator has hit a new low relative to the ESTLI, now at a 6.7% discount, the lowest since last September.  It’s normal for light lambs to become more heavily discounted at this time of year, with 10% the lows hit last winter.

In the West lamb prices remained strong.  The West Australian Trade Lamb Indicator (WATLI) gained 8¢ to sit at 648¢/kg cwt, now easily the highest priced lambs in the country.  Interestingly Mutton in WA is only sitting at 390¢, in line with east coast indicators.

The week ahead

The 8 day forecast is finally showing some decent falls for NSW, which if falls, will bring sheep supply to a bit of a halt.  This is assuming a lot of sheep and lambs have already been offloaded during the dry weather, and the rain gives some optimism in terms of feed supply in the early spring.

The could cause a final bounce for sheep and lambs markets, and provide a bit of a boost for those who have suckers which are ready to go.

The lamb price bounce continued this week despite a bit of a lift in yardings.  The direct to works supply appears to have weakened, with plenty of competition back at the saleyards.  All this despite the stronger Aussie dollar which is not doing great things for our export competitiveness.

Figure 1 shows the significant bounce in the Eastern States Trade Lamb Indicator (ESTLI) with the indicator hitting 628¢/kg cwt, a 20¢ rise for the week.  This week’s lamb prices were at a four week high, but still lag the exceptional values of April to June.

Price increases were general across the states, and in mutton as well.  But one that caught our eye was an 88¢ increase in light lambs in SA, with prices back at 627¢.  A solid 99¢ premium to SA trade lambs, which doesn’t make a lot of sense.  Buyers could get a 16kg lamb for $100 plus skin, or a 20kg lamb for $105 plus skin.

Figure 1 shows the forward contracts which were available back in May and June. If growers who took contracts have been able to get suckers up, they will enjoy a solid premium to the spot market, at least in the first couple of weeks of August.

The rising Aussie dollar has been the bane of grain growers over the last few weeks; it’s now up to 79¢.  This puts the ESTLI in US dollar term back at 500¢, around 20¢ below the April high, but getting expensive none-the-less.

The week ahead

There is no rain on the horizon, which could send the market either way.  Last year a good winter and spring saw prices hold on while growers put more weight on lambs.  This year finished lambs might be hard to come by as a lack of winter feed could have curtailed growth rates.  On face value this would suggest cheaper store lambs, and relatively expensive trade and heavy lambs as we move through August

It’s nice to be right sometimes, even if it is only for a week. The weekly comment last week suggested the slide in lamb prices was about to halt, and halt it did. The market even bounced back above 600¢ as lamb and sheep yardings recorded another weak week.

Figure 1 shows what lamb producers think of the saleyard values on offer over the last couple of weeks. East Coast lamb yardings spent their second week in a row close to the lowest levels seen in 2017. It’s been over 12 years since lamb yardings were this low in the first two weeks of July, and it seems to have started to bite on the supply of lambs to works.

The Eastern States Trade Lamb Indicator (ESTLI) bounced this week (figure 2), gaining 27¢ to move back to 605¢/kg cwt. NSW and Victoria both had strong rallies, while in South Australia the trade lamb indicator inexplicably 37¢ to sit in the doldrums at 495¢/kg cwt. SA price are 110¢ behind the ESTLI, and we would expect them to climb back up next week.

In the West trade lambs are keeping pace with their eastern cousins, sitting at 610¢/kg cwt. WA Mutton fell through 400¢ this week, setting an 8 week low of 374¢/kg cwt. East coast mutton values also eased, but remain better than the west, averaging 434¢ in Victoria and NSW. SA has the cheapest mutton as well, sitting at 340¢, and this was up 39¢ for the week.

The week ahead

So was the rise in the ESTLI a dead cat bounce, or a sign of the market steadying. Supply would have to pick up from here to send lamb prices lower, and at this time of year it’s usually hard to find many prime lambs. We might see lamb prices above 600¢ for the rest of July, at least until new season lambs start to hit the market.

Mutton supply is less predictable, as there are always sheep out there is seasonal conditions push them to market. A good rain will see sheep prices rally, but there doesn’t appear to be too much on the forecast.

It doesn’t take a rocket analyst to work out why sheep and lamb prices have been sliding for the last month. The Eastern States Trade Lamb Indicator (ESTLI) this week broke through the 600¢ mark as the supply of stock direct to works appears to be reaching a peak.

Figure 1 is not a pretty sight for livestock or grain producers in the wheat-sheep belts of Australia. In particular the Riverina had its lowest rainfall June on record, and this is a time which is usually pretty reliable.

It wasn’t supply at the saleyards which saw the ESTLI and National Mutton Indicator (NMI) tank this week. Figure 2 shows that lamb supply at saleyards fell heavily, and the story was the same for sheep. Regardless the ESTLI lost 47¢ and Mutton 39¢ with the ESTLI at a 6 month low of 578¢/kg cwt, and the NMI a four month low.

The fall in saleyard supply back up the anecdotal evidence of processors being booked up with sheep and mutton flooding out of the NSW and Northern SA as the dry begins to bite, and prices remain historically ok. This is at a time when at least one major processor is shut for winter maintenance.

Interestingly in the West, where the dry has been pretty bad also, lamb prices have fallen but now sit at a premium to the ESTLI (figure 3) of 605¢/kg cwt. The WA Mutton market has been receiving support from the east coast, as it was trading at a large discount, but the now the east coast is now only around 40¢ better, which at $8 per head for a 20kg cwt sheep, is likely to stop the trucks heading across the Nullabor.\

The week ahead

Given the state of the flock, and the flock rebuilding intentions, it’s likely the rapid decline of the last month will come to a halt soon. Old season lamb supplies have to be close to exhausted, and new season stocks are a slow build from now on.

Expect sheep and lamb markets to find a floor soon, with further declines to come in late August and September if the season doesn’t turn around.

In general lamb prices were largely steady this week, but trends were mixed depending on category and state. With supply remaining relatively strong as we pass the winter solstice, and new season lamb supply fast approaching, the question is whether we have seen the peak.

After spending the best part of six months tracking well above last year’s prices, the Eastern States Trade Lamb Indicator (ESTLI) this week eased back to within 17¢ of the late June-16 value, at 650¢/kg cwt (figure 1).

We are yet to get hold of any supply figures for the last week, but anecdotally are hearing that there are plenty of heavy trade, and heavy lambs hitting the market at the moment. This is at a time when some major processors are winding down for winter shutdowns, thereby reducing demand.

Light and Merino lambs also fell this week, losing 16 and 25¢ respectively on the east coast. But it was Restocker lambs which were the major movers, falling 54¢ to 661¢/kg cwt. Figure 2 shows this is the cheapest restocker lambs have been since February.

It’s not unusual for restocker demand to ease at this time of year, as any lambs purchased could have to be marketed against new season lambs, and price declines can get ugly in the spring.

Mutton markets eased in line with trade lambs, losing 17¢ to move back to 504¢/kg cwt. Still a good price, and just 22¢ off the peak.

the week ahead

There shouldn’t be many old season lambs left out there, but they seem to keep coming. With only about six weeks until new season suckers come to the market, time is running out for the ESTLI to have a crack at 700¢. Forward contracts are still available for trade and heavy lambs at around 660¢ for August, so there is some concern around supply at that time of year. Given the price resistance being found at 700¢, it’s hard to see prices being much higher than this come August.