Tag: Sheep

Lamb finds a base to bounce off.

Posted on by Caitlin Dearden

The lamb market seems to have found a level it was happy with this week. With supply disruptions due to the Melbourne Cup, it’s hard to get a gauge on supply, but it appears we might have seen the spring low.

The latest yardings reported by Meat and Livestock Australia (MLA) are to the end of last week.  Figure 1 shows that the Melbourne Cup holiday, along with the lower prices, saw a 39.6% decline in yardings. The supply decline saw 119,000 fewer lambs hit the yards across NSW, Victoria and SA.

A quick look at this week’s lamb reports tells us supply has bounced back. Victoria yarded over 100,000 head, which is around normal for this time of year.

Slaughter numbers also tell an interesting story. Figure 2 shows the total sheep and lamb slaughter for the east coast has been close to last year’s levels. Despite stronger prices than last year, processors still seem to be able to make a margin.

Figure 3 shows the Eastern States Trade Lamb Indicator (ESTLI) has again bounced off 680¢ to this week post a 17¢ gain to hit 695¢/kg cwt. There was, however, a decline in prices at Wagga on Thursday, which dragged the ESTLI back from 700¢.

WA Trade lamb and mutton prices managed to maintain their strong levels this week, at 627¢ and 405¢/kg cwt respectively. It’s interesting, however, to see WA restocker lambs back at 554¢/kg cwt.  With cheaper grain in the west, you’d think there should be a narrower spread between restocker and finished lambs than in the east.

What does it mean/next week?:

Growers seem to have shown their cards, with prices under 700¢ now seemingly a hold for many.  It shouldn’t be surprising, with forward contracts close to 800¢ a recent memory.

With more rain forecast for the coming week across parts of NSW and key Victorian and South Australian areas, there might be more sheep and lambs held, and higher prices.

Wool market gets a toehold.

Posted on by Caitlin Dearden

Despite this week’s offering being the largest we have seen in a long time, the market managed to find a point to stabilise from the incessant falls. Sydney saw support for the broader microns, Melbourne found strength in the finer microns and mid fibres performed best in Fremantle, resulting in an overall steady week.

The Eastern Market Indicator (EMI) gained just 5 cents, ending the week at 1,781 cents. The Au$ lost some ground, closing at 0.727 US cents. That put the EMI in US$ terms to 1,295 cents, a gain of just 3 cents (Table 1).

In Fremantle, results were fairly mixed with the Western Market Indicator (WMI) rising just 4 cents to end the week at 1935 cents.

Compared to the original roster posted last week, only 35,326 of the 39,883 bales intended for sale this week actually came to the market. Growers appeared more confident in the markets level, passing in 10.9% of bales. This resulted in a clearance to the trade for the week of 31,487 bales, 6,032 fewer than last week (Figure 2). When we look back to the 2017 season, this week saw 36% less bales sold.

The dollar value for the week was $62.05 million, for a combined value of $1.28 billion so far this season.

In the auction weeks since the winter recess, 484,121 bales have been cleared to the trade, 126,565 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year continues to grow and now sits at 8,437 bales per week fewer.

It was the crossbred and oddments sectors that provided the market with the real boost. Crossbreds saw gains of 5 to 25 cents, while the carding indicators rose between 70 and 120 cents across the three centres.

The week ahead

The roster for next week shows 35,334 bales on offer across the three selling centres on Wednesday and Thursday. The following weeks are looking at 37,540 and 36,778 bales.

Considering the market managed to cease it’s decline even with one of the largest weekly offerings in recent times, there is optimism for the coming weeks.

Its officially a rout

Posted on by Caitlin Dearden

While AWEX comments on Thursday noted that the market had steadied there is no denying the market again suffered from a lack of buying demand. Reduced offering and falling prices across the board were the end result of what has been a perplexing 6-week period.

The Eastern Market Indicator (EMI) fell 76 cents to accumulate a 200 cent fall over the past 4 weeks, ending the week at 1,776 cents. The Au$ was again stronger up almost 2.1%; the EMI in US$ terms fell by 29 cents to end the week at 1,293 US cents (Table 1).

This puts the US$ EMI back exactly where it was one year ago, and with a dramatically reduced supply year-on-year the conclusion can only be that demand has fallen – at least for the immediate timeframe.

In Fremantle, the Western Market Indicator (WMI) lost ground, falling 74 cents on the back of the last two week’s 89 cents falls to end the week at 1931 cents.

Compared to the original roster posted last week, only 32,000 of the 35,000 bales intended for sale this week actually came to the market. Again, growers were unimpressed with the market and passed in 20.9% or 6,734 bales. This resulted in a clearance to the trade for the week of 25,455 bales, 4,359 fewer than last week.

The dollar value for the week was $48.9 million, for a combined value of $1.22 billion so far this season.

In the auction weeks since the winter recess, 452,634 bales have been cleared to the trade, 109,043 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year continues to grow and now sits at 7,788 bales per week fewer.

Of note is that over the past 7 weeks the EMI has fallen 237 cents or 11.7%, while the clearance to the trade has been 82,000 bales fewer than the same period last year.

The only bit of positive news from the market this week was AWEX reporting that on Thursday there was evidence that buyers were reluctant to pass up wool with good specifications resulting in some “resolute bidding” for these types.

Cardings again struggled to find support, with the Melbourne sale noting a further 6.4% fall.

According to the AWEX roster, the next three weeks less than 40,000 per week are predicted, with 39,883 bales next week.

After what looked like a steadier market last week, the opening on Wednesday was again a case of an accelerated decline as buyers waited for the bottom of the market to appear. Again, it would be a brave call to predict a rally next week, the best result would be a cessation of the decline.

East coast lamb yarding levels off like a rocket.

Posted on by Caitlin Dearden

The spring flush is well underway now and the increased numbers at Victorian saleyards this week contributed to an extra 100,000 head of lamb exchanging hands. Although swelling yarding levels weren’t contained to Victoria this week with SA, NSW and WA all posting increased figures.

The impact of the additional supply saw prices ease across the East coast for all NLRS reported categories of lamb. The Eastern States Trade Lamb Indicator took the biggest hit on a ¢/kg basis, with a 33¢ drop to close at 678¢ (Figure 1). Price falls ranged from 12¢ to 30¢ for the remaining lamb categories (Table 1).

East coast lamb yarding levels are up 55% on the week to see 286,762 head reported, well outside the normal seasonal range that could be expected for this time of the year and 49% above the five-year average (Figure 2). The additional lambs across the east coast came from all states, with NSW lamb yardings up 34%, SA up 99% and Victoria increasing 72% from the previous week’s figures.

In the West, lamb yardings were higher too, up 23%. However, the impact on price of the additional supply was restrained as trade lamb prices have been supported by the resumption of the live trade. Mid-week reports for the Western Australian Trade Lamb Indicator saw it gaining 50¢ toward 625¢/kg cwt. As we reported earlier in the week, the spread discount between East coast and West coast trade lamb has narrowed significantly since the return of additional buying competition in Western Australia with RETWA being granted an export license.

East coast mutton prices continue to hold firm, easing a meagre 3¢ on the week to close at 428¢/kg cwt. Mutton prices remain solid despite prolonged levels of sheep slaughter. Indeed, from July to November weekly mutton slaughter rates have been trending 30% higher than the seasonal average but it hasn’t been enough supply to soften prices significantly. Offshore demand is continuing to soak up the excess it appears – stay tuned for an update on mutton exports next week.

What does it mean/next week?:

As our analysis yesterday pointed out, it appears the Victorian spring flush for Bendigo is completed and Ballarat’s numbers are looking to peak soon too. That only really leaves Hamilton as the remaining saleyard to contribute to the final surge of lambs as we head toward the end of the year.

Downside for the ESTLI is probably going to be limited to the 630-650¢ region as outlined in our Mecardo analysis piece from 18th October entitled “A season spent at the edge of normal” and expect a recovery back above 700¢ reasonably quickly after the spring flush subsides.

Bendigo nearly done but spring flush just begun.

Posted on by Caitlin Dearden

We have been talking about Victorian lamb yardings for a couple of weeks now. Firstly, they were lower than normal, then they rapidly picked up last week, to be much higher than normal. We thought it timely to take a look at seasonal supply trends across the major yards, and what this might mean for supply, and price, in the coming weeks.

There is a strange dynamic in lamb markets, where for most of the year NSW contribute most of the east coast yardings, while Victoria has the largest slaughter. In the spring and early summer, Victoria briefly takes the mantle for strongest yardings, pushing east coast levels over 250,000 head.

Figure 1 shows east coast lamb yardings and the impact Victorian yards have during the last two months of the year. During October, lower Victorian yardings saw total east coast yardings track below last year’s levels and the five-year average. The October dearth seems to have been caused by weaker new season lamb supplies at Bendigo and Ballarat. The Ballarat lambs might still be coming, but we suspect the Bendigo lambs were never there.

The Bendigo spring flush is dwarfed when Ballarat and Hamilton get going in November and December. Figure 2 shows Ballarat last week was not far off its peak young lamb supply and the flow is just beginning at Hamilton, with 8000 last week and 11,500 head today.

In November and December 2016, Ballarat and Hamilton yarded 593,000 head of young lambs. In 2017 it was 587,000, which is remarkably consistent, but the seasons were similar in terms of good spring rain.

This year spring has been dry for Western Victoria, not disastrously, but dry enough to see plenty of producers contemplating turning off lambs which traditionally might have been shorn and carried through to the New Year.

We are already seeing a good supply of restocker lambs keeping a lid on prices. Figure 3 shows the National Restocker Lamb Indicator is only marginally ahead of last year, despite the recent very strong finished lamb prices.

What does it mean/next week?:

With a big flush of lambs still to come out of Western Victoria, don’t expect store lamb prices to improve too much before Christmas. We have seen restocker lamb indicators hold well relative to the recent fall in trade and heavy lamb values, and this can be put down to the forward contracts on offer.

However, if supply overcomes demand from restockers over the coming month or six weeks, restocker lambs might well become a hold as the spring flush of lambs ramps up.

Key Points

  • Victorian saleyards have been a bit slow in October, but supply from Hamilton and Ballarat is about to ramp up.
  • Restocker lamb prices are holding relatively firm at last year’s levels but will face supply challenges.
  • If restocker lamb prices fall there might be some tough decisions for those supplying lambs between now and Christmas.

The fall steadies but no light in the tunnel.

Posted on by Caitlin Dearden

Wool producers did their best to support the market this week; of the 40k bales rostered only 35,700 were eventually offered for sale with a further 5,900 passed under grower’s reserve. Despite this, the market again fell.

The Eastern Market Indicator (EMI) fell 20 cents on top of the last two week’s 149 cents fall, to end the week at 1,854 cents in AU$. The Au$ rose almost ¾ of a cent; the EMI in US$ terms fell by 5 cents to end the week at 1,322 US cents (Table 1).

In Fremantle, the Western Market Indicator (WMI) lost ground, falling 28 cents on the back of the last two week’s 137 cents falls to end the week at 2005 cents.

Compared to the original roster posted last week, less than 75% of the 40,000 bales intended for sale this week were in fact cleared to the trade. Growers passed in 16.6% or 5,970 of the 35,784 bales that were finally offered for sale. This resulted in a clearance to the trade for the week of 29,814 bales, 3,500 more than last week.

The dollar value for the week was $62.06 million, for a combined value of $1.17 billion so far this season.

In the auction weeks since the winter recess, 427,179 bales have been cleared to the trade, 91,600 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year continues to grow and now sits at 7,050 bales per week fewer (Figure 2).

Of note is that over the past 3 weeks the EMI has fallen 169 cents or 8.3%, while the clearance to the trade has been 45,000 bales fewer than the same period last year.

This is a serious correction with the EMI giving back 12% since it peaked mid-August at 2116 cents.

19 MPG and broader types while also easing have been less affected, with 19 MPG and finer not only feeling the brunt of the general market correction, but also the increased volume of drought influenced fine wool has tested buyer’s capacity.

Cardings have plummeted in recent weeks, going from being the “star” performers to now almost unwanted. The Melbourne Carding indicator has fallen from the August peak of 1558 to this week close at 1116, a 28% retracement. Despite the more affordable price, 25.5% of offered Cardings did not reach growers reserve, with only 3,819 of the 5,120 bales offered sold.

The week ahead

According to the AWEX roster, the next three weeks less than 40,000 per week are predicted, with 35,600 bales next week. Growers have decided they are comfortable holding wool so its unlikely this number will get to the auction next week.

While this week the fall was reduced compared to the past two weeks, it is still too early to call the bottom of this recent correction.

Hold, Hold, Hold, Now!

Posted on by Caitlin Dearden

Those familiar with the movie ‘Braveheart’ will recall the scene where Mel Gibson and co are facing a cavalry charge from the English Army. Mel said ‘Hold, hold, hold, now!” and the Scottish rebel impaled the English horses on spears and subsequently won the battle. It’s a weak analogy, but with Victorian lamb producers facing encroaching dry conditions, they have held, and held, and held, until this week they raised their spears, but were themselves impaled. Metaphorically, not literally.

After Matt’s article last week, and earlier this week, looking at Victorian lamb yardings, or lack thereof, this week the lambs appeared (Figure 1). The lift in supply was felt across all yards, with Naracoorte in South East South Australia also seeing a big rise.

With plenty of lambs and sheep seemingly booked in over the hooks, prices tanked sharply. Normally we don’t see Victorian lamb yardings over 100,000 head for another month and so processors definitely didn’t have the space to kill them.

When supply overwhelms demand, prices fall. Although, there was some good news. The Eastern States Trade Lamb Indicator (ESTLI) fell 77¢ but only back to the levels seen three weeks ago. Processors and restockers were happy to buy lambs at the lower levels, even if they weren’t to be killed this week.

All lamb prices fell this week, but mutton ‘only’ lost 35¢ to sit at 431¢ on the east coast and 400¢ in the west. While in the west, lamb prices rallied, gaining 9¢ to 575¢/kg cwt. Still well behind the east, but on the way up.

Next week?:

The high prices of the last couple of weeks, along with dry weather, encouraged growers to offload lambs this week. The test will be whether supply continues to flow, or if it pulls back with lower prices. The Melbourne Cup usually sees lower yardings next Tuesday, so we might not get a real indication until the following week. The relatively strong prices in the face of heavy supply are encouraging, however, at least for well-finished lambs.

Tide turns for wool

Posted on by Caitlin Dearden

If last week was bad for wool prices, it turned out that it was only the start of the fall. This week, no segment was spared, and the full force of the correction was felt causing the market to fall dramatically.

The Eastern Market Indicator (EMI) fell 96 cents on top of last week’s 53 cents fall, to end the week at 1,874 cents in AU$. This is the lowest close since May. Despite the Au$ easing almost ¾ of a cent, the EMI in US$ terms was also hit hard, dropping 78 cents to end the week at 1,327 US cents (Table 1). The last time the US$ EMI closed below 1,350 was December 2017.

In Fremantle, the Western Market Indicator (WMI) lost ground, falling 61 cents on the back of last week’s 76 cents fall to end the week at 2033 cents.

Again, sellers adopted a strong position to the falling market, passing-in 23.6% or 8,150 of the 34,522 bales that came forward. This resulted in a clearance to the trade for the week of 26,372 bales, the lowest sale clearance for this season.

This again produced a reduced dollar value for the week of $57.23 million, with a combined value just ticking over the $billion mark to $1.10 billion so far this season.

In the auction weeks since the winter recess, 397,365 bales have been cleared to the trade, 76,273 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year continues to grow and now sits at 6,356 bales per week fewer (Figure 2).

The market peaked in August when the EMI topped out at 2116; since then the retracement has been of the order of 11%, while the 19 MPG has pulled back 9%. The last 2 weeks have been terrible for the wool market, almost 30,000 bales fewer sold compared to year-on-year figures, and the EMI has lost 7.8%.

For the second consecutive week, the superfine end has been hit hard, as the weight of drought-affected wool has caused the 16 & 17 MPG’s to pull back 15% from the August peak. Cardings fell out of bed this week losing a massive 11% in Melbourne and have come back from their August highs by 26%.

The week ahead

The offering next week is rostered at 40,000 bales; this week 7% of the rostered offering was withdrawn prior to sale so its most unlikely this number will get to the auction next week.

As buyers try to anticipate the bottom of the market, the uncertainty doesn’t give much confidence that the market will stabilise next week.

Where are the Victorian lambs?

Posted on by Caitlin Dearden

Reduced lamb throughput across all states this week saw prices rise across the board for sheep and lamb markets. The Eastern States Trade Lamb Indicator (ESTLI) demonstrated the apparent supply shortage with a 51¢ gain to see it close yesterday at 788¢/kg cwt.

The biggest drop in lamb yardings was reserved for South Australia, with a 24% decline noted in saleyard numbers this week, but all states posted a fall. The curious situation is the flat line of Victorian lamb throughput this week. This is the time in the season when numbers should normally be starting to swell (Figure 1). Victorian lamb yarding levels are running 13% below the seasonal five-year average for this time in the year and at 49,302 head, it’s a whopping 34% lower than the same time last season.

The reduced supply of lamb across the Eastern seaboard is having an impact on east coast throughput with the trend dipping back below the lower end of the normal range for the first time in over four months (Figure 2). East coast lamb yarding levels are trekking 15% below seasonal average levels and the lack of supply is evident in price activity this week.

The NLRS reported eastern states daily indicators posted price gains across all categories of lamb ranging between 25-85¢, with Heavy Lamb managing to break back above the 800¢ level to close at 825¢/kg cwt. Even east coast mutton managed to lift 14¢ on the week to close at 466¢, that’s despite sheep yarding levels on the east coast remaining elevated. Indeed, east coast mutton throughput is running 48% above the five-year average for this time in the season with NSW and Victorian saleyards the key contributors to the additional supply.

What does it mean/next week?:

The Bureau of Meteorology released their updated rainfall outlook yesterday and it paints a dire picture for November with most of the country expected to have a drier than normal end to spring (Figure 3).

If this isn’t enough to shake out any remaining lambs in the next few weeks then I’m not sure what will. Expect to see Victorian lamb yarding levels start to swell in the coming month and this is likely to put a cap on further price gains in the ESTLI for the short term.

Pass-in rates rise as market falls

Posted on by Caitlin Dearden

This week’s market posted a timely reminder that wool markets are not one dimensional, that is less supply does not always equate to increasing price. Supply fell and at the same time prices across the board retreated back to August levels.

The Eastern Market Indicator (EMI) fell a further 53 cents on top of last week’s 21 cents fall, to end the week at 1,991 cents in AU$. The EMI in US$ terms was cushioned to some degree by a slightly stronger Au$. The EMI dropped 25 cents to end the week at 1,405 US cents (Table 1).

In Fremantle, the Western Market Indicator (WMI) lost ground, falling 76 cents or 3.5% to end the week at 2094 cents.

Sellers reacted strongly to the cheaper market, passing-in 19.4% or 7,013 of the 36,084 bales that came forward. This resulted in a clearance to the trade for the week of 29,071 bales, the third lowest sale clearance for this season. Of note was that on Thursday Fremantle passed-in 33% of all offered bales, while in Melbourne 31.6% of fleece didn’t make growers reserve on Thursday.

In Fremantle, AEX reported that grower reaction to the lower price of Wednesday resulted in 13% being withdrawn prior to sale and a further 40% of fleece lines failing to meet grower reserve.

This again produced a reduced dollar value for the week of $67.95 million, with a combined value just ticking over the $billion mark to $1.05 billion so far this season.

In the wool auction weeks since the winter recess, 370,993 bales have been cleared to the trade, 60,000 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year now sits at 5,500 bales per week fewer (Figure 2).

Looking to the same sale of last season, this week’s clearance was a massive 14,000 bales fewer, and for the rest of 2017 up to Christmas, all selling weeks cleared in excess of 40,000 bales. The weekly average for this season is sitting at 33,700 and is only likely to shrink as the season progresses.

While falls were generally in the order of 1 – 2%, the outlier was the superfine end where the weight of drought-affected wool caused the 16 & 17 MPG’s to pull back 4%.

Cardings were particularly hard hit this week, Melbourne and Fremantle reported the Cardings indicator down 7.5 to 8.0%, while Sydney lost 6%.

The week ahead

The offering next week is rostered at 38,702 bales, which is most unlikely to get to the auction as growers digest this week’s market correction.

The final day didn’t provide any good news as a lead into next week, so we are likely to see a continued easing in the market as buyers try to find sustainable limits.