Sheep meat

Finished heavy lamb supply drying up in the south

RMA Network CEO Chris Howie July 5, 2024

RMA Network CEO Chris Howie.

SOUTHERN livestock agents have highlighted the quickly reducing number of finished heavy lambs left in the system, RMA Network chief executive officer Chris Howie said in his latest industry wrap.

Andrew McIlIree at DMD Nhill in Victoria commented that the lambs are on the ground but playing catch up with limited grass and cold weather.

As we move into July and August it is evident the 24-32kg carcase will become shorter in supply which is opening opportunities for lambs to be traded with supplementary grain to capture price upside.

With the late start and limited feed during the April-June lambing window early suckers will be scarce until mid-September in most areas.

A later run of new season lambs provides opportunity to capitalise on improving old lambs and also take early drafts with potentially smaller numbers of the freshest suckers to grab the price.

At the Forbes saleyards in NSW this week sucker lambs estimated at 23kg cwt made $190, which bodes well for early drafts.

Supermarket campaigns align to new season lamb most years and quality is the driver. If they look a bit slabby or dry in the paddock the lamb will not improve on the truck Fresh and sappy is the article required when sucker prices are quoted.

Forward pricing released by processors for July and August saw many producers and agents take a position with a clear line of sight on margin. In turn it also saw an improvement in the store market in many areas.

The awaited jump in lamb pricing appeared this week with quotes across most centres showing a $15-$30 lift with the range on heavy lambs being $7.20-$8.30/kg and some exceptional runs bouncing to $8.80/kg. Grain-assisted lambs are being well rewarded and auctioneer opening calls are critical as the market moves up to capture true value. Mutton has eventually got off the floor with saleyards and pricing determined by processor location ranging from $3.60-$4.20/kg for a 20-30kg carcase. Some of the works will have scheduled maintenance shutdowns so if you have mutton to move pre-shearing get it done.

Be aware of history repeating

Be aware late seasons in South Australia and the Riverina can see the Merino and Merino cross lamb numbers push back to concertina on the southern run of second cross lambs later in the season, dependant on the Spring. In turn, this condenses supply that puts pressure on price.

My suggestion this year is that if they are ready, sell. You may have smaller consignments and a bit more work bringing the ewes in to draft, but a better overall average.

Keep The Sheep gaining support

In WA, the Keep the Sheep movement has gain support from all over the livestock industry highlighting how an ill-informed, poorly executed decision can impact so many people across so many sectors. As I mentioned a few months ago, once the legislation gets passed the mantra would immediately redirect to cattle – bingo, it happened within minutes.

The overall impact of season and sheep industry confidence in WA is reflected in the numbers that came east. A recent EP3 article shows the scale of numbers which had a direct impact on pricing in the eastern states.

Dry spell ‘break’ but still cold

We seem to have broken through the dry spell in the south and west, although the general comment is it is still cold. WA has had excellent rain in the northern wheat belt travelling as far north as the southern Kimberley. The central and eastern wheat belts are fair, but could do with a shower. The Great Southern is around average with the south-west very good.

South Australia has a start with a green tinge, but no paddock feed. The traditionally wet areas in the south-east of SA are still dry enough with no standing dry feed. Victoria’s Western District is following the same trend, with the overall season in Victoria remaining patchy up into the Riverina. Tasmania has been cold with limited early rain and many concentrating on managing retained livestock and unloading anything else, like the other southern states.

New South Wales north of Dubbo is still receiving rain with grazing crops well established and the best weight gain report so far of 1.5kg per day in cattle using the Optiweigh real time in-paddock system. Queensland is now heading into the dry, but overall there is a good feed reserve with a lot of well-conditioned stock coming out.

Agistment enquiries abound

Much of the early feed has been claimed and many agents in better areas suggest it will be another four weeks before there is sufficient growth to take additional stock on.

For those supplying or buying, set the rules early. What are you paying for? Will other stock be in the same paddock? Is it a weekly fee or a weight gain? Who is responsible for husbandry and mustering?

What is the agreed number tolerance when taking them home or selling? Are there suitable yards and water? With agistment, the disputes are never at the start – always at the end.

Livestock finance and planning

Many traditional suppliers of agistment are now utilising livestock financing products that are promoting attractive rates when looking at a 4-8 month trading window. Heifers, splitting cows and calves, ewes and lambs and store lambs seem to be the flavour of the trades.

In the past, I have made comment on looking at your sale program and feeding towards your target market. You should be doing this all the time now. It is time to think a step further out and look at some timings that change the pricing dynamics.

Many in livestock and wool recognise the boom and bust cycle, but not many look at the change or pivot point when the outside influences start to impact demand and price.

Cattle we all agree have a demand curve being driven by the US drought and herd reduction which has a direct impact on many international supply chains. Even with grass and a rebuild tomorrow in downtown Oklahoma it will take three years to gain a numbers recovery. With this in mind most agree there is an underlying confidence around beef pushing out to three years. As much as the Australian herd being adjusted up by 4 million head, producers will continue to sell on finished condition, market suitability and season so put that number in the bin and move on – worrying about it is wasted time.

Sheep and lamb will follow the same path as cattle, but with a much shorter turn around window.

Understanding ewes have multiples with a shorter gestation and sell off time frame this is not rocket science. As we saw exiting the 2019 drought, within two years flock numbers recovered quickly as well with the numerous very old ewes still in the system.

WA, SA and Victoria sheep numbers have been badly mauled by the dry start to the 2024 season and political decisions moving the supply dynamics around. This has seen a reduction in confidence which as seen in 2000 / 2001 saw many sheep producers exit and never return. The simple introduction of the electronic identification tag in SA and NSW has now taken so long it is also adding another straw to this lowered confidence.

What can you do? Take the time to look at the market drivers. There is a lot of commentary out there with the likes of Matt Dalgleish at EP3 or Simon Quilty MLX who analyse international markets and trends aligned to Australian supply.

Using these long-term forecasts and adding a bit of conservatism you should be able to identify opportunities to create a solid three-year block of production and margin. Then as the run starts to end pivot towards the next opportunity, don’t just blindly continue on with “it’ll be right” as your only security. As we saw at the end of 2022, that did not end so well for many of us. Seasonal conditions no one controls so this is the loose spanner in the forward dynamics plan.

Price separation in cattle

Main point is the separation of price on southern cattle, predominately Angus and the large seasonal supply run of northern cattle. Volumes of quality cattle in the North are seeing processors well supplied through July although grids have stabilised this week and it seems a little easier to find a slot.

Many Queensland producers have held sale numbers with available feed to see if the market does lift a bit once the big licks of major pastoral company cattle start to slow a bit. I think a small lift in price will see another run of northern numbers into the end of August. Again nothing new and happens most years.

The south though is a different game with the season shortening up the supply of higher end Angus cattle aligned to many of the grass-fed programs and feedlot entry. Cow grids prices are higher in the south based on breed and agent phones are starting to buzz with enquiries around availability of slaughter cattle for July and August. This happens every year, but the season saw many Winter cattle off loaded in early Autumn and this is driving earlier enquiry from end users. In turn the grass-aligned programs are providing an excellent upside for those that have taken the time to register.

Many supply relationships are struggling as the weight gains off grass have not met specific targets, so some rejigging has started which creates opportunity for other producers and agents who work on building strong relationships.

Feeder steer prices have broken through $4/kg lwt in the south, with various quotes dependant on quality and delivery points around $4.10/kg plus a little bit. Cow hook prices for best style rump and loin are indicated at $5.20-$5.40/kg and have seen a flow of northern cattle being consigned to gain kill space and price even with freight cost. The northern pricing for feeders still remains in the low $3/kg range for cattle with content. Straight Brahman heifers have been difficult to move.

Flying crops prompt plan changes

With the NSW grazing crops really flying, a number of progressive farmers and agents have questioned what they normally do. Speaking to Nigel Kerin, Kerin Poll Merino at Yeoval and Charlie Upton, Glynn Agriculture, Moree both questioned their normal plan and did some weight conversion sums comparing buy price and species.

Nigel’s original plan was lambs onto crop, but the sums quickly showed the return came from feeding undervalued Angus heifers. Charlies’ clients operation normally aligned to steer trading arrived at the same conclusion. The discount on lighter heifers, all breeds has been the best weight gain & price upside available. Next season this may change but for the last 6 weeks heifers have been the option from the Gulf of Carpentaria to Mount Gambier.

At the Alice Springs show sale, Steve Gaff, Director of Red Centre Rural, Livestock and Property said about 4100 steers were offered on 4 July. Palmer Valley Station rang the bell with a large run of EU Angus and Black Baldy steers 400kg+ up to $3.62/kg going to Princess Royal feedlot at Burra. Across the spread of breeds, steers 400kg and over ranged between $3.20-$3.62/kg. Lighter steers were a bit cheaper ranging from $3.00-$3.30/kg with some lighter condition Herefords down to $2.70/kg. Steve’s run of 2500 steers averaged 369kg to return an average of $3.12/kg.

Feedlots operating from SA, QLD, NSW and Victoria included Princess Royal, ACC, Morgans, Teys, Condabri, HB Feeders with local station support on lighter steers. No heifers were presented.

Considering freight, the Alice Springs show sale has provided Central Australia with another bell ringer.

Bull sales are up and away in NSW and Queensland. One of the earlier areas for sales is the New England. Shad Bailey, Director of Colin Say & Co, Glen Innes said sales so far have been up in numbers offered by 10-15 percent. Clearances have been good with support, especially on Angus from Queensland. However average prices are down 20-30pc, with top end stud and commercial buyers holding value and everyone else dropping down to the bottom values. Both of us agree this opens an opportunity for buyers to operate in the mid-range and get excellent value for money invested.

I had a great catchup with Brian Kennedy, Elders Northern NSW Stud specialist. He said most studs have had a good preparation season and bulls will present well. As raised by Shad, prices will hover around last year’s on the better end; however, any significant lift in catalogued numbers by studs could see the buyer pool start to fade. Overall, the studs who have the respect of their buyers produce a quality article, support buyers with ongoing service and listen to the breeding requirements of the commercial operators will continue to get positive results as a reward for their efforts.

Alex Croker from H Francis & Co Wagga Wagga said the southern bull demand is quite subdued, with many making use of bulls on hand reflecting season and returns on weaners this year. With their main run of sales starting in August, Alex commented many will look at how the Spring is setting up, which should see confidence return with increased paddock purchases.

In closing, it seems all indicate realistic reserves are the key this year to maximise clearance rates.

My tip is every bull / ram you buy needs to be improving something in your herd / flock. Remaining neutral means you are going backwards. Not buying means you need to buy more next year on a potentially much dearer trend.


 Heifers

 Cows and calves

 Older steers with frame but lacking condition

 Grain supplement lambs

 Ewes and lambs to freshen

 August RMA Network / TAFE / MLA Agency and supply chain training – register now.


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