Tag: Sheep

The title of this commentary isn’t referring to the grass but the sale yard price board for lamb and sheep across the east coast. Although, if we keep seeing rain falling in all the right places it won’t be long before the pasture starts to green up as well.

This week finally saw some decent rain to large parts of Western Victoria and Western NSW with falls extending beyond 50mm in some areas – Figure 1. A welcome relief to those that have seeded crops but also bringing optimism to sheep producers hoping to get some pasture growth before the winter chill sets in earnest.

The Eastern States Trade Lamb Indicator (ESTLI) responding as expected to the improved climatic conditions with a 24¢ rally on pre ANZAC day prices from last week to close at 745¢/kg cwt yesterday. Expectations of tight lamb supplies as we head into winter has seen the ESTLI push higher earlier than last season and now sits over 150¢ higher than at this time during 2018 – Figure 2.

As outlined in this week’s analysis the concerns over tight winter supply has seen Coles issue forward prices for July at 830¢/kg which bodes well for producers with supply to offer over the colder months.

The onset of rain lifted prices for sheep and lamb categories across the eastern seaboard, with all NLRS reported east coast categories recording gains this week between 20-65¢, Figure 3. East coast mutton responding particularly well to the wet, recording an 8% lift on the week to see it testing all-time highs to close at 547¢/kg cwt yesterday – it wasn’t that many years ago that lamb producers would have been ecstatic to be getting prices near the 550¢ level.

What does it mean/next week?:

The forecast for rain into the week ahead shows lighter falls expected for Western Victoria and Western NSW with the rain band moving across to the eastern regions of both states. The sales program has returned to normal after the ANZAC and Easter disruptions, so we will get a clear picture of how late Autumn supply is stacking up in the coming weeks.

While the rain persists and as supply starts to dwindle lamb and sheep prices will continue their march northward. Despite the recent heroics of an unnamed Game of Thrones character, kept vague so as not to be accused of spoiling plot lines, “winter is coming”.

Over a couple of weeks of supply disruptions, lamb and sheep markets have largely been treading water. There have, however, been some interesting moves in the Merino lamb category, if not in the prime lamb space.

Lamb slaughter rates plummeted last week as Good Friday took out a day’s slaughter and probably any Saturday morning shifts as well. Lamb slaughter was down 25%, which is obviously more than one day’s slaughter, so perhaps things are starting to tighten.

Sheep slaughter was down before Easter, having lost 32% since the last week in March. Good Friday only took out a further 4% (Figure 1), so there might have been a bit of a shift back to sheep.

Lamb and mutton markets were largely steady this week, with the Eastern States Trade Lamb Indicator (ESTLI) down 5¢ to 721¢/kg cwt and the East Coast Mutton Indicator losing 5¢ to 506¢/kg cwt.

The only real movement in the east coast indicators this week came from Merino Lambs. Figure 2 shows the East Coast Merino Lamb Indicator stopped just under 700¢ at 692¢/kg cwt. Merino lambs saw a gain of 29¢ and sit 160¢ above the same time last year. We are probably seeing tighter supply from the ordinary season, combined with stronger demand for Merino producers looking to restock.

There has been some good rain in western NSW this week, which while not drought-breaking, is the best they’ve had for some time. There might not be many sheep left out there but it can only be good for demand.

Next week?:

Next week will get back to more normal supply with full weeks resuming. There is still no real rain on the forecast but the recent move in sheep supply might be a pointer to what is to come, for both sheep and lambs.  Forward prices are starting to move towards 800¢ for June and July, but will it be enough?

Prices for all NLRS reported categories of east coast lamb and sheep have risen from levels recorded in mid-March, despite most measures of supply reaching toward seasonal highs. Most categories of lamb are fetching over 700¢ and mutton is holding above 500¢ this week.

Since mid-March lamb throughput across the east coast has been running 18% higher than the pattern set by the five-year trend and sheep yarding levels have been more pronounced, averaging weekly levels 47% above the five-year trend (Figure 1).

A similar picture has emerged for East coast lamb slaughter with average weekly levels running nearly 14% higher than the five-year average trend (Figure 2). The higher supply is having limited impact upon prices as meat works seem to be happy soaking up the additional supply prior to the Easter period slowdown.

A summary of saleyard price movements highlights the market strength over the past four weeks in the face of the higher supply. All categories registering closing prices this week that are around 70¢ to 100¢ higher than a month ago (Figure 3).

The Eastern States Trade Lamb Indicator (ESTLI) managed a 2% gain on the week to close at 722¢/kg cwt. In the West, trade lambs managed to climb also, up nearly 1% on the mid-week price summary from Meat and Livestock Australia, but were unable to break above the 700¢ level yet at 679¢/kg cwt.

What does it mean/next week?:

Reduced sales and a lighter offering is expected as we hit the Easter lull so it’s unlikely to see prices retreat too much in the coming weeks. Although the forecast for rain into the next week is pretty light on and without a clear sign of a decent Autumn break in the south there will be limited opportunities for prices to surge too much higher.

Lamb prices have had another positive week, with the Eastern States Trade Lamb Indicator (ESTLI) heading towards Easter above 700¢. As outlined earlier in the week, this could just be the start of bigger things to come.

It’s hard to get too excited by the ESTLI breaking through 700¢ since November. Over the hooks (OTH) prices have been above 700¢ for much of the first three months of the year and the saleyards have taken plenty of time to catch up. The unexpected strong supplies have kept a lid on saleyard prices as processors generally have gotten their fill direct.

With the release of yardings data for the week of the fourth, we can see why prices steadied last week. Figure 2 shows East Coast Lamb yardings hitting their highest level for the year, just shy of 200,000 head. The rapid price rise of the previous week no doubt drew out remaining good lambs, but things might have tightened a bit this week.

Lamb prices rallied in the west too. The WA Trade Lamb Indicator gained 20¢ this week to hit 674¢/kg cwt, the highest price since the first week of the year. WA mutton is lagging the east coast, sitting at 438¢, while the east coast is on 509¢/kg cwt.

Sheep yardings were also higher on the east coast last week and this might have continued this week.  No doubt those still waiting for rain are finding 500¢ mutton very attractive.

What does it mean/next week?:

There is little rain on the forecast on the east coast but it looks like autumn might kick off for parts of WA this week. We are also in for a couple of short weeks which can work for or against the market depending on how supplies are tracking. There are reportedly still plenty of lambs booked up, so don’t expect strong rallies for lambs this week, but after Easter things will be interesting.

There has been a softer trend present in lamb and sheep yardings in recent weeks. It is not uncommon to see a reduced sale yard offering as we head toward the Easter lull and with recent rainfall to much of the Eastern third of the country it seems to have encouraged firmer prices.

Throughput figures for this week are yet to be released. However, the trend in sheep yarding along the East coast is most definitely softer with the most up to date numbers showing the lowest weekly levels since the start of February – Figure 1.

Despite the softening pattern, sheep throughput remains above average, and this may persist when the figures are released next week as individual reports from many NLRS reported sale yards indicate that numbers were up, possibly encouraged forward on the back of last weeks’ strong prices.

It is likely that rainfall had a bigger influence on prices than sale yard throughput levels this week with decent falls across much of the Eastern states encouraging restocker buyers back into the market, particularly at NSW yards – Figure 2.

Across the East coast NLRS reported categories of lamb and sheep all managed a lift in price. Mutton was the standout performer among the pack with a near 7% gain on the week to close above 500¢. Lamb categories posting a more subdued performance, with gains of 1.5%-2.5% noted. Restocker lambs managed to climb back above 700¢, while the benchmark Eastern States Trade Lamb Indicator settled just below to close the week at 697¢/kg cwt (Figure 3).

Lighter rainfall in the West wasn’t enough to inspire a price gain with the mid-week update from MLA showing a 5¢ slip on the West Australian Trade Lamb Indicator for the week to settle at 654¢.

What does it mean/next week?:

The Bureau of Meteorology rainfall outlook for the coming week shows only light coverage of 1-5mm around nearly all the coastal fringe, with only the far northern tropics getting a heavier dusting.

Virtually no rain is likely for most of the sheep rearing country, so price movements are likely to be influenced more by supply. Heading toward the Easter break there’s a good chance this will continue to tighten so the price bias remains to the topside.

We knew it was going to happen, but the extent of this week’s move in mutton prices has been rather extraordinary. The indicators haven’t reflected the full move yet but we can get some ideas from today’s sale at Wagga.

Sheep prices have gone bananas this week. Figure 1 shows the National Mutton Indicator (NMI) hitting a six month high of 473¢/kg cwt yesterday. Prices did rally as the week went on. At Wagga yesterday, Meat and Livestock Australia (MLA) reported sheep making over 600¢/kg cwt. Just last week, there were heavy lambs making less than 600¢.

Wagga saw new records in terms of heavy wethers making over $200 per head, while restockers competed with processors for ewes.  Many ewes made over $150 per head, with some better than $200.

We’ll have to wait until next week for full supply data but Wagga mutton supply dropped 30%. Thanks to a bit of rain, and the threat of more, producers kept what sheep they have left at home.

Unlike sheep, lambs get to a point where they have to be sold before they turn into sheep.  Lamb supply was still strong enough this week, but prices did get some lift from the mutton market. The Eastern States Trade Lamb Indicator (ESTLI) hit a 2019 high of 683¢/kg cwt, having gained 36¢ for the week.

WA saw the biggest jump in their mutton indicator and also had the most expensive mutton in the country. The WA Mutton Indicator gained 72¢ to post a 20 month high of 477¢/kg cwt. In fact, WA mutton prices have only ever been higher briefly in June 2017 (Figure 3).

What does it mean?

Sharply higher prices usually bring out more stock. A lack of supply is fixed by higher prices. During droughts, or when there is a sniff of a break, this sometimes doesn’t work. There may not be any more sheep that producers are prepared to part with, as they are required for future income. The coming week will tell the story but the record mutton indicator is 550¢ and it looks like we are headed in that direction.