RMA Network CEO Chris Howie.

SHEEP and lamb producers need to look behind the current prices, sell before surplus stock processors wind back and consider running Merino wethers, RMA chief executive officer Chris Howie says in his latest column.

As a quick overview, lambs from 15kg to 35kg dressed are making $10.80-$11.80/kg cwt with some spiking above. With mutton, $8/kg is in the middle and larger numbers will create a better discussion. However, we need to report correctly as skin prices have also lifted on the back of the wool market and can distort the carcase calculation quoted from sale yards if not factored in correctly.

We love a good lamb story and big prices, but it is important we understand what is behind the price. Many of the big prices are based on lambs purchased at big prices also. The agents and producers who target this market are very good at what they do and understand when to buy, how to feed and most importantly when to get out. The Ballarat contingent leads the pack on creating super heavies and don’t have a fall very often. It is also important to acknowledge the genetic quality of the second cross lambs achieving the big prices – be careful of rose coloured glasses when setting your expectations and make sure you are comparing apples with apples.

Andrew McIllree, agency principal at DMD Nhill, handles large numbers of Merino wether lambs every year to improve into the winter. With the pastoral areas of South Australia having such a good season, he said the normal volume lines are not appearing.

Northern New South Wales is definitely the place to look with water and feed now driving producers to sell. If you have Merino wether lambs ready to go pick up the phone, because they are in demand.

As I mentioned last month, we will have a period of shorter than normal sheep and lamb supply over the next four months so prices will remain robust. However, I am already seeing adjustments at processor level on numbers required per week. Again, it comes down to simple economics of how much can a processor pay just to keep the chain running?

The feedback I had last week from Adelaide to Shepparton tells me ewes will be lambing into strong green feed and that means early slaughter lambs. Watching the sales, especially AuctionsPlus, it is evident Merino ewes with some skin are very buyable. Subtract the value of the wool and the lamb from the buy price and the ewe is back to a very affordable outlay.

Consider running some Merino wethers

Just a thought – I think this is the year to run a mob of wethers again. The additional wool clip created as they are shorn at 1.5 year-old and then sold into the hogget market stacks up extremely well.

High prices breed apathy – don’t become lazy and “she’ll be right” because stock are worth plenty. Remember when you were feeding them? Why is $20 or $50 worth less now than then.

Luck has nothing to do with sale price, it is a result of effort and spending a bit (time and money) to make a lot. We also tend to see our livestock take a back seat as soon as the diesel starts to burn for cropping. This is a big mistake, because livestock are providing a better return per hectare at present so make sure they get the attention to gain the best return.

Consider agistment

1989 was the last time I saw northern South Australia this good and some are saying further up it is wetter than1974. For those that restocked or have plenty of feed, agistment is a great money spinner. What I do ask is make sure you do the right thing by those paying you for your feed.

Manage to achieve weight gain for your client. Don’t just keep chucking numbers on, which will see poor outcomes for all. Freight cost becomes a huge issue if you get negative weight gains.

For those buying agistment, be careful; just because it is green it is not always good. Sending stock into the pastoral areas for the inexperienced has seen many a fall over the years. And a little tip; always negotiate the return percentage before you start trucking to the feed. In a big year, getting them back is often the hardest part because you can’t find them and when you do, you can’t get to them without a helicopter.

Merino wool is sexy again

Yes, Merino wool is sexy again and paying more than the bills. Schute Bell Badgery Lumbly wool auctioneer Jack Finch said the market is showing great positivity across fleece, with cardings shooting the lights out. Several Chinese orders have stepped into the traditional European types which has put a bit of fun into the market. It is apparent some of the bigger Chinese mills are now working their way through existing inventory and may re-enter the market with a bit of purpose over the next couple of months. There have been positive price movements even with an Australian dollar that will strengthen once the bun fight in the Middle East straightens out all bodes well for the next 12 months. Once again, lock some of this price in as it moves up.

Youth and the industry’s future

Our future is important; I’ve spent a month watching the youth within the livestock and wool industry learn and display their craft.

Another agency and supply chain training course was held at Wodonga led by Simone Dand, Wodonga TAFE and supported by Meat & Livestock and the RMA Network. It was attended by 27 young agents from 23 agencies from all over Australia. Support from subject matter experts covered transport, sustainability, livestock production, wool, animal health, personality profiling and all the components for developing and supporting producer facing relationships. In its 14th year and after 344 participants, this course have created a significant elevation of professional understanding for young and new agents within the livestock and wool industry.

Following on, the ALPA Young auctioneers’ competition in Sydney was an outstanding success with the NSW and National titles held at the Sydney Easter show. We all know our industry is about family and it was evident with a significant number of the competitors being second, third and fourth generation agents following their fathers and grandfathers. Michael Purdle, Purdle Plevey at Manilla Agencies took the national honours and became the first to win following his father Patrick’s footsteps.

A bit on finance

Whilst in Sydney for the YAC I was invited to attend the NAB agri-report release.

Full credit to NAB executive for regional and agribusiness Khan Horne and his team on pivoting so quickly. With the massive global changes that took place the day after this important report went to print, many of the drivers had changed significantly. My main take away was being “deal ready”.

Just a great line, simple and effective. Often real time opportunities are missed because we have not prepared earlier irrespective of your business. Too often we continue in hope; however, if you set up so you are “compelled to act” this takes risk off the table. Draw a line in the sand that if you hit a certain point the trigger is pulled – decisive action.

Finance is an absolute driver for success and irrespective of who you use get what you need in place months ahead. That little bit of pre-planning will create significant reward for your business when the feed is up and about.

Notes from croc country

The annual Northern Territory Cattlemen’s Association, NTCA, event was held in Darwin. Elders key account manager, Northern Territory and far north Queensland, Paul McCormack said it was an outstanding success with the event going to another level. Wagyu on the plate, road trains on the dance floor and choppers hanging from the roof, the territory know how to run a good show and it is well worth attending from my past experience. Make sure you take some salt tablets though because no schooner is safe. Paul said the extended big wet has delayed many teams getting back to camp; however the first round is just underway. The NT is designed after millions of years to handle the water and as it runs off the feed grows. Good signs for the next 12 months.

Cattle

The wet in the north is still hindering musters, but I expect a significant flow of heavy bullocks appearing from the channel country once we hit late May. Northern NSW is doing it tough, but the weaner sales are really firing. Quality is abundant and buyers are seeing prices hold in the mid-$5/kg lwt for steers. Heifers have eased a bit and sitting in the low to mid $4. With freight rates lifting on fuel prices the adjustments seem to be about 25 cents per kg at this time.

A disrupted international supply chain has impacted flow on base level commodity such as 85/90cl grinding beef which saw cows have a downward correction of 20-40 cents per kilo pre-Easter. This was probably expected, considering rates being paid and the current situation. However, in the week after Easter, numbers shortened in the south and a creep up of 10-15 cents has occurred. Next week will determine if this shift can hold as numbers return to normal.

Looking from outside, the level of cattle on feed is well up and was planned as an expectation of shorter than normal supply during the southern winter. Many of the additional cattle purchased in December-January are now hitting exit weights and are allowing some elasticity in supply for processors. In saying that, the sums were probably done on a shandy of more grass cattle appearing early from the north which has not really started yet because of rain.

Fuel costs, processing and the season

Speaking to several in the processing game, the fuel shock has seen a significant rise in cost to operate. In turn, the blocking up of red meat containers on ships is impacting flows similar to the COVID congestion. Reports are up to 800 ships of mixed types are caught in the Persian Gulf. Again, the various freight components are the issue in our supply chain even though US pricing is still very strong. Indications of price resistance points are now appearing that may see some decisions being made in the middle of winter. This has the potential to take some volume players in the sheep space out of the market whilst waiting for numbers to lift.

Milling Stuart office manager Fleur Guan at Dunedoo said the dry continues and their sale after Easter saw 1800 cattle presented — a record for the company. Seasonally, it is not getting better; however, prices are holding and buyers are still active. It is easy to speak of the big centres all the time but the smaller yards such as Dunedoo and my home town Mt Pleasant mirrored across the country continue to create community spirit which is so important.

Seasonally speaking, from Port Augusta north it is exceptional, the Murray Mallee good and upper south east of SA is good. The Western District of Victoria is tight and needs water,the  Riverina is patchy but ok and northern NSW is pretty ordinary. Queensland is just being Qld with a bit of everything, but it is overall good, and the NT and Kimberley is wet, with crocs in the back. Tasmania is heading into winter and Western Australia is like Qld; a bit of everything, but mostly good. In the south, I’m pretty comfortable that we have had a late March break and the season is away in most areas.

On wind

It was always given that cabbage with pickled eggs and beer are the main causes.

However, our run of cyclones may have trumped this. Speaking to my cousin who works in Karratha for one of the gas companies during cyclone Narelle, on land the wind was whistling at about 120km. On the ocean platform that had been evacuated, the wind was around 200km, with a nine metre swell. Not much good for wearing my Akubra.

BRS and BS

“People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.” Author unknown, but suggested to be Winston Churchill.

Un-Australian is the only way I can describe the treatment of Ben Roberts Smith. I do not have all the information, but I do have a good understanding of the facts. Australia is not here today because we waved daffodils and bright balloons. It is because of men like Bruce Kingsbury, VC on the Kokoda trail and those awarded in Afghanistan, one of the evillest combat areas ever, that we live as we do today. Those who have never actively served cannot comprehend what happens in combat when protecting your mates is the number one priority. It is not a game of football.

My question is why can’t many of our politicians read the room anymore?

Opportunities

 Run some Merino lambs through till wethers

 Merino ewes with a skin still under the odds

 Cows and calves from northern NSW still good value – even with the freight

 Shear sheep before selling – it’s worth the effort.

 Get “deal ready” and be “compelled to act”

 Provide agistment and aim for a positive weight gain experience.

 Stick to your buying plans – the world still needs to eat

 Leverage relationships instead of driving – that’s what networks are for.

 Plan, plan, plan and ask for help.