Tag: Sheep

The Eastern States Trade Lamb Indicator (ESTLI) hit an all-time high this week at 681¢/kg cwt encouraging a lift in throughput, particularly out of Victoria and South Australia, as robust prices draw out supply.

Figure 1. shows the rising trend over the last few weeks in East coast lamb throughput with a further 21,000 head added to yarding numbers this week to reach just short of 204,000 head. Since the recent dip in mid-March, lamb throughput has risen 35.4% in response to the firmer prices on offer at the saleyard.

National price movements saw Restocker Lambs leading the charge, up 9.1% to $115 per head. In the remaining categories, we saw lamb posting gains of 3.5-5.5% on the week, more in line with the 4.1% increase displayed by the ESTLI – Figure 2. National over-the-hooks prices also firming for all categories of lamb by about 3%, while the National Mutton Indicator posted an impressive 8.2% lift on the week to close at 490¢/kg cwt.

In US$ terms, lamb prices have reached a seasonal peak at 513US¢/kg cwt, this is only the second week it has been above 500US¢ this year – Figure 3. Despite the record local prices for Aussie lamb being received by producers at the moment lamb prices in US terms have been a lot higher. During the 2010/11 season our lamb in US terms reached toward 675US¢/kg cwt so at current levels it is still 24% off its all-time highs.

The week ahead

The continued supply coming forward could see the recent upward momentum in lamb prices start to slow down in the coming weeks, particularly if producers are further encouraged by the firm prices on offer. The ESTLI may see some consolidation around current levels before the tighter supply into the Winter period should provide further support to probe above 700¢.

Lamb prices continued to charge higher this week, despite stronger yardings.  The higher prices are showing no signs of dampening demand, with some categories hitting new highs, while others eased off this week.

East Coast lamb yardings responded to the higher prices of recent times by ramping up to a five week high.  Producers are obviously looking to take advantage of higher prices by cashing in any lambs that are near ready.

Lamb yardings were much higher than last year, but Easter came early in 2016.  The Eastern States Trade Lamb Indicator (ESTLI) gained 22¢ this week, hitting 654¢/kg cwt, just 11¢ off the peak hit back in February (figure 2).

It was NSW which drove the ESTLI higher this week, as the 25¢ rise saw a new record price of 659¢/kg cwt.  Light lambs in NSW saw a 42¢ rise to be the highest indicator in the land, at 673¢/kg cwt.  By contrast, light lambs in SA fell 58¢ to sit at a paltry 539¢/kg cwt.  For a 17kg cwt lamb that is a $23/head difference.

It wasn’t all bad news for growers in SA, with mutton prices rallying 97¢, or 28% to 437¢/kg cwt.  Still behind Victoria at 482¢, SA prices couldn’t stay that low for too long.  The rally in Mutton on the east coast was offset by a 76¢ fall in WA and as such the National Mutton Indicator gained just 3¢ to 453¢/kg cwt, it can’t quite get to the record (figure 3).

The week ahead

The rain from Cyclone Debbie shouldn’t impact the lamb market too much, but it won’t hurt. Lamb supply out of northern NSW is likely to be disrupted, so we can expect some solid support for lamb markets.  Some forward contracts for trade lambs have been floating about this week at 670¢ for May.

While processors don’t always get it right on their forwards, there is little to suggest they are going to look silly by being a long way above the market.

 

There were good reasons for cattle prices to rise this week.  Demand was up, from restocking and processing sectors, while supply was down.  There were two main reasons, widespread rainfall, and the good old ‘black swan’, which flew in from Brazil.

In reality the widespread east coast rainfall would have been enough to halt the gradual slide in cattle markets.  Almost all major cattle areas in Victoria and NSW got between 25 and 50mm, while in Queensland it was the far west, and south east which missed out.

On the back of the rain, supply tightened.  Figure 1 shows that Eastern Young Cattle Indicator (EYCI) yardings were steady on last week.  However, it should be remembered that last week included a public holiday in Victoria, so supply could be said to be weaker.  Indeed, EYCI yardings haven’t been this low in a non-holiday week since 2013.

Young cattle prices rallied, but you might expect a bit more.  The EYCI gained 11¢ for the week to reach a five week high of 622¢/kg cwt.  NSW and Queensland were the main movers, with feeders and trade steers gaining ground, while in Victoria prices were steady.

Heavy Steers were the biggest movers in slaughter markets, with Qld gaining 31¢ to 524¢/kg cwt, and NSW 25¢ to 578¢kg cwt (figure 3).  There was little movement in Victoria, but prices were already in the 570-580¢ range.

It could be speculated that improving demand for grassfed export beef, the type produced by Brazil, has already started to filter through to cattle markets.

The week ahead

The better conditions are not going to go away soon. The improved demand for slaughter cattle could easily dissipate next week, but it’s very uncertain.  What we can expect is tempered downside in young cattle from here, as there will be some pressure over the coming months, but improved restocker demand should soak it up.

Regular readers will know that when we talk about lamb markets, we use the Eastern States Trade Lamb Indicator (ESTLI) as a base for our analysis.  The regular reporting and widespread coverage of the ESTLI make it a reliable gauge for the level and direction of the lamb market.  However, with the recent launch of MLA’s new market information website, we can now drill down to saleyard level and get some specific regional spreads to help guide buying or selling decisions.

The ESTLI is a broad indicator, taking in 18-22kg lambs sold at NLRS saleyards on the east coast.  MLA’s excellent new market information and pricing tool allows producers to look at individual saleyard lamb weekly prices for a range of weights and buyers.  It doesn’t matter what type of sheep or lamb is being sold, MLA’s tool allows you to look at last week’s price and a chart or table of up to 3 years or historical data. Additionally, the data can be exported into excel so it can be further analysed.

To give an example of how helpful this data can be, we have run some comparison of price for 20-22kg lambs, sold to processors, in Hamilton and CTLX.  To get a good data, we had to merge the young lamb and old lamb prices series, and this makes it obvious when young lambs arrive in these markets. This analysis will give us an idea of how reliable the ESTLI is as an indicator for these yards at different times of year.

Figure 1 shows weekly prices for the ESTLI, Hamilton and CTLX lambs over the past 3 years.  While prices do tend to move together, there are time when lambs Hamilton and CTLX are at significant discounts to the ESTLI.  If you are selling in these centres, these times are to be avoided.

Figure 2 gives a bit clearer picture of the premiums and discounts for lambs at Hamilton and CTLX.  Interestingly, both yards have an annual dip in prices relative to the ESTLI in the spring, with Hamilton seeing stronger discounts.

Looking at markets on an annual basis shows a clear strategy for trade lamb producers who use these saleyards.  At Hamilton, there is an annual heavy discount for trade lambs to the ESTLI, starting in September and not really correcting until November.  This is due to the dearth of lamb numbers, and specifically young lambs, with a critical mass not usually arriving until November, when prices generally run at a small discount to the ESTLI.

At CTLX (figure 4) the trend is similar, but discounts are not as heavy, while lambs command a premium to the ESTLI in late spring, when a bulk of the ESTLI supply is coming from Victoria.

Key points:

• MLA’s new market information tool allows detailed analysis of individual saleyard prices relative to the ESTLI.
• Both Hamilton and CTLX experience discounts to the ESTLI in early spring, before new season lambs arrive.
• The ESTLI is a reliable price indicator for these yards except for the early spring, when alternative markets should be sought.

What does this mean?

The brief analysis tells us that for most of the year the ESTLI is a good indicator of prices at Hamilton and CTLX.  When lamb prices move to heavy discounts to the ESTLI is when there aren’t many lambs being sold.  This tells us that if we are going to sell lambs in early spring, these saleyards might not be the best option.

We can also see that strong premiums to the ESTLI don’t last long in either saleyard.  Either the rest of the market catches up, or yardings increase to see prices fall the following week.  Either way the market corrects.

This data is available for all NLRS reported markets, and can be a valuable took in looking at market trends, and timing sales.

Lamb markets seem to have found some sort of level where buyers and sellers are happy, with prices largely steady this week in the east.  In the West the lambs were the most expensive in the country.

Supply was back this week on the east coast, as the public holiday in Victoria impacted numbers.  It was in NSW and SA where prices rallied however, with their respective trade lamb indicators gaining 10 and 17¢ to 622 (NSW) and 576¢/kg cwt (SA).

This lifted the Eastern States Trade Lamb Indicator (ESTLI) to 622¢/kg cwt, a three week high.  Figure 1 shows that it has deviated slightly from the trend seen in 2011, but still remains very strong.  Lamb producers are basically getting $20-25/head more for their lambs this year than last year, which is a pretty good result.

Figure 2 shows the stellar rise of lamb prices in WA, as they move to a premium to the ESTLI for the first time in 15 months.  Lamb prices in WA have rallied for four and a half months, and added 200¢, or 44%.  This weeks 16¢ rise to 645¢/kg cwt was in spite of a 40% increase in yardings.  The lift in yardings might be due to over the hooks quotes running almost 100¢ behind the saleyards.

Mutton values remain strong, with Victoria having an average price of 443¢/kg cwt this week, the highest in the country.  In the west mutton is slightly behind, having fallen 46¢ to 438¢/kg cwt this week.

 

The week ahead

The rain forecast in figure 3 should see solid support for lamb and sheep prices over the coming weeks.  It will encourage holding lambs, and sheep as it looks like an autumn break for at least some parts of the country.

Downside is likely limited in the short term, unless there is a backlog of lambs about to hit the market.  It’s hard to imagine they’ve been held this long with prices at these levels.

After a couple of weeks of whippy price action and volatile movements in throughput lamb and sheep markets settled down a bit this week, broadly speaking. Although, some bigger moves were noted for mutton in South and Western Australia.

Figure 1 highlights the recent pattern of east coast lamb throughput showing a much more subdued pattern this week, in contrast to the seesaw of the weeks prior. Yarding figures hardly budging with a meagre 1.4% rise to sneak above 181,000 head. The Eastern States Trade Lamb Indicator (ESTLI) responding to the stable throughput settling exactly where is closed this time last week at 611¢/kg cwt. Stability in price the order of the day for most categories of lamb in the national indicators too with 0-1% gains in all classes of lamb, except national restocker lambs, down 3% to $96 per head.

Equally stable price movements for most of the state based categories of lamb with many posting a 0-3% gain. Victorian restocker lambs, SA light lambs and WA light lambs the exceptions – down 5% ($106 per head), up 11% (570¢/kg cwt) and down 5% (601¢/kg cwt), respectively. National mutton slightly softer on the week, down 2% to 412¢ – dragged lower by SA mutton which reported a 13% fall to 381¢.

In contrast, WA mutton experiencing a stellar performance with an 11% price rise to 478¢/kg cwt. Spurred on by much softer supply (as shown in figure 2) with WA mutton throughput down 39.6%. The impressive performance this season not limited to mutton in the west with the Western Australian Trade Lamb Indicator (WATLI) continuing to press higher this week to close at 629¢ – figure 3. The tighter season and firm export demand helping support WATLI and WA mutton, 31% and 78% higher than this time last year – respectively.

The week ahead

Forecast rainfall between 5-15 mm to much of the sheep bearing regions of the nation next week will give slight relief to the recent dry spell to much of SA and Western Victoria during the last fortnight. This is likely to encourage further price consolidation to continue for the next few weeks for lamb and sheep markets.

A firm recovery in price across all east coast categories of lamb and mutton reflecting the underlying tight supply anticipated this season to see the Eastern States Trade Lamb Indicator (ESTLI) surge to fresh highs, closing at 664¢/kg cwt yesterday – a gain on the week of 7.4%.

The stellar performance of the ESTLI so far this year reflected in the seasonality percentage price gain chart displayed in figure 1, showing the gains since the start of the season extending beyond the “normal” range (as represented by the green band showing where seasonal price gains have fluctuated 70% of the time over the last decade). Strong weekly gains not limited to trade lambs with the east coast heavy lamb up 7.3% to 671¢, Merino lamb up 5.6% to 596¢ and restocker lamb up 13.4% to 754¢/kg cwt.

East coast mutton also enjoying some upward momentum on the week, reflective of the trade and heavy lamb gains, to see it rise 7.5% to 441¢/kg cwt. Figure 2 showing the seasonal percentage gains for mutton so far this year respectably tracking along the ten-year average pattern. Although the price pattern for mutton not as robust when compared to the ESTLI performance and the pattern set by mutton during the 2016 season.

Figure 3 highlighting the underlying tighter supplies of lamb and sheep this season with the combined east coast lamb and mutton slaughter levels continuing to trend below the 2016 pattern and under the five-year average for this time of the year.

To read more about the expected tight supply during 2017 and our ESTLI forecast released in December 2016 click here.

The week ahead
Autumn generally heralds a period of price consolidation for the ESTLI as shown by the sideways movement of the ten-year average seasonal percentage price gain pattern – figure 1. This would suggest that the ESTLI will find it difficult to continue to post the impressive gains recorded since the start of the season and will likely trend along the top of the green band until the next price surge as we head into the usual winter peak.

Interestingly, projecting a percentage price gain mirroring the top of the green band during winter 2017 of around 35% on the starting price this season of 549¢ would place the winter peak for the ESTLI at around 740¢ – not far off our ESTLI forecast released in mid-December 2016 calling for a winter peak of 750-755¢ (see link above).

The very high prices seen last week had the desired effect for processors, drawing out very large lamb numbers, and sending prices lower. Sheep are a bit of a different story, especially in Victoria, where yardings waned, and as such prices have largely held their ground.

Figure 1 shows East Coast lamb yardings increased by 15,529 head this week or 7.6% to record their highest February weekly yarding in at least 11 years. No doubt the extra high prices of last week led producers to send anything which was ready to market.

The result of the influx of lambs was lamb prices not quite returning to the prices of a fortnight ago. The Eastern States Trade Lamb Indicator (ESTLI) fell 28¢ this week to sit at 618¢/kg cwt, still a very solid level. The fall was strongest in Victoria, where trade lambs lost 45¢, or 7%, and moved back into line with NSW and SA.
Mutton yardings only managed a marginal rally, increasing 4.8% to sit at almost exactly the same level as last year. Mutton prices reacted to an extent, falling less than 10¢ in NSW (404¢) and Victoria (444¢), but increasing 13¢ in SA to 402¢/kg cwt.

In WA lamb prices continued to play catch up to the east coast, with the WA Trade Lamb Indicator (WATLI) hitting a 19 month high of 548¢/kg cwt (figure 3).
Lamb yardings in the West were up by 62%, with rising prices an indication that export demand is possibly increasing. This improves the prospects for sustaining current strong prices over the coming months.

The week ahead
The south west of WA is set for some very strong rainfall in the coming week, which could see the continuation of rallying prices there. In the east the question is whether this week was the start of a run of lambs, or whether the strong prices pulled out all that is ready. If it is the former prices will continue to ease, if it’s the latter we might see another spike, or at least prices tracking sideways.