News

Howie advises sheep and lamb producers to look forward

Terry Sim, August 5, 2022

Stock business and development manager Chris Howie.

WITH only a few weeks left before feed and sun regularly match up, now is the time to look at taking an opportunity position on trading lambs or buying in your breeders.

I am completely agnostic about what breed and wool type, but make sure you match your purchase up with an end plan. I have seen so much hay wasted in paddocks it seems a no-brainer to buy early and hold on hay until the feed is up and running.

Kevin Keller, Nutrien Murray Bridge, said normally the Murray Bridge crossbred sucker sale is one of the first for the season. Kevin said they have pushed it back to provide lambs with a little bit of time to stretch out after a cold Winter and late start.

The first significant run of Merino suckers and store woolly lambs have hit Bendigo from the Ivanhoe area.

Considering the strong season I would expect the Riverina, Broken Hill, west coast and Eyre Peninsula to have considerable numbers that will continue to run from now on. It has been a few years, but many of the older heads will remember the early big Mallee lambs sales like Loxton, Ouyen, Karoonda, Cleve, Murray Bridge before the 100 percent cropping mentality took control. Big-boned, square Merino lambs, off clover and that hard you could crack a flea on their back. These lambs turn into exceptional heavy export lambs plus the bonus of a wool clip for delivery in the New Year.

Take a breath and focus on what you can control

Take a breath – it is very easy to get wrapped up in the emotion of a perceived “what if”. Drought, rain, election, flood, fire, disease, Ukraine and umpires at the football: none of these can be changed by us on the ground. Sometimes we need to focus on what we can control and trust others to do their job properly.

In July 2020, we saw the lamb market go from $8 to $5.60/kg cwt because of the COVID unknown and the following panic about demand. Five weeks later the market had recovered to $7.50 with a lot of lambs being sold without much consideration other than “they have to go”. It is so important to take the time to become informed and look at what you control, instead of becoming a lemming and running with the media-driven mob.

We are now seeing a fear of Foot and Mouth Disease driving an unfounded “sell at all cost” mentality. This in turn has seen lamb rates fall from a solid $7.60/kg to sub-$6/kg in recent weeks and the ECYI falling under 900 cents/kg, with young cattle being sold out of sequence into a nervous market. I understand some stock must go e.g. cutting teeth, but Spring lambs and eight month- old calves have plenty of time, so calm down, we are not in a drought and we are on the right end of Winter now.

This current influx of supply and a number of underdone stock now have processors struggling with kill space and a need to clear out contracts written in expectation of normal Winter shortages. This “run on the bank” is creating a price knock on effect right through the supply chain without good reason. I don’t know what will happen with FMD, but much the same as it is with rainfall, none of us can control it so we need to manage our respective programs toward a positive outcome.

Opportunity – with an ongoing reset in the sheep and cattle market it does provide significant opportunities to buy in females or trading stock over the next four months. Anywhere that has received some sun has seen grass and clover growth explode. Western NSW is beyond good and many other areas that are currently a bit wet will start to dry as tends to happen in downtown Australia. Food for thought: It is easy to stop trading because of the result this year; however, that only crystalises the outcome. Stepping back in provides an opportunity to gain a recovery at a lower cost base.

Good feed beside the Broken Hill to Wilcannia road.

I am not saying ignore the risks, but adjust how you think to take these “perceived what if’s” into consideration. New lambs give you until July next year before teeth, Merinos continue to grow wool and heifers can belt out a calf for you. If we do have an incursion, females and a bit of wool provide a two-way option, quality always sells and they provide the time needed to ride any bumps.

Looking around

With the month starting with the Alice Springs Show sale and an impromptu trip from South Australia via Broken Hill to Walgett and the Upper Horton in NSW, I saw the feed and water situation improving all the way. The flow in the Darling had Tilpa with flood warnings heading downstream and Wilcannia already has a full channel. The Lachlan is spilling into the Macquarie Marshes and the bottom of the Murray has 157 gates open — Murray Darling Basin flows. Overall a lot of water is shuffling around in NSW and the Murray catchment.

It is a mixed bag over various state areas with the mid-north of South Australia needing a rain yet large parts of NSW have been too wet with many cropping programs unable to sow. Cold weather and frost has halted pasture growth in many places but as mentioned we are close to the spring now.

I also attended the Rural Marketing Agents (RMA) conference late July where independent agencies from all over Australia gathered to be informed and network together. What I did see was a group of like-minded businesses who left the day to day agency competitiveness at the door to engage at an industry level. It was a great event with a range of top-quality industry speakers covering topics including FMD, RBA interest rates, international supply and demand, processor relationship management as well as some excellent social events closed out with Ian Healy, ex-Australian wicket keeper as the dinner speaker.

The cattle market

The normal northern off load is under way putting pressure on price. Feeder cattle pricing is softening with wet weather impacting many of the grazing crops. Spot prices on better Angus steers are drifting towards $5.60/kg on spot market. However many are delivering to contracts at +$6/kg over the next three weeks who put contracts in place at an acceptable margin early in the year – good business. Remember the average is what puts the money in the bank not chasing the 1 week top price in 52 weeks.

A significant number of northern cows are finding their way to NSW and Victorian processors – again this happens most years with numbers available determined by live export demand.

With the easing ECYI heifers are becoming buyable and considering the availability of feed are a great option.

Whether targeting grass processor orders, joining and selling as PTIC or direct to feedlot heifers provide multiple avenues that can be fixed with a quick draft.

It is important to keep the cattle market in context. We are coming of an all-time high price period so when looking at the market today historical returns are still good and we have feed in front of us in most areas.

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