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Chris Howie: November – an opportunity missed in the sheep industry?

Chris Howie, February 5, 2024

Chris Howie.

WAS November an opportunity missed by many in the sheep and lamb sector, RMA chief executive officer Chris Howie asks in his latest industry wrap.

The availability of feed in rain affected stubbles was an absolute bonus, yet so many did not move. With trades now appearing on the lambs purchased then for $40-$60 now selling for $120-$160, it is important to understand why for next time.

Compared to previous years, the financial outlay and interest component was insignificant, but the appetite was non-existent.

Pricing was well under normal values due to excess unfinished lambs being pushed to market and a shrinking pool of heavy lambs with a dry Spring. Processors continued to operate, but the lack of backgrounding orders is the main reason the floor fell out of the sheep and lamb job. Once this supply glut finished, prices were always going to lift and the unknown rain factor added another dynamic shortening supply again. Bag lamb orders from processors underpinned this glut and once the grazier demand lifted, so did the prices to complete the export contracts.

Phill Butt, Livestock and Property, Yass secured lambs in the second week of January for some of his backgrounding clients averaging $116 yet the following week those same style lambs with any cover elevated to $130 going to the processor. Phil thinks the larger yarding’s will provide some opportunities over the next month.

Mark Jones, McCulloch agencies, Walgett has pencilled a sheep sale on A+ for the 20 February with 20,000 on offer. The Northwest of NSW is renowned for large heavy cutting sheep so worth a look. It has been many years since a dedicated sale was listed specific to this area.

Thursday’s draw at Wagga for 80,000 will probably soften the lamb market, but looking back, this is a normal pricing trend in a normal year. Return from school holidays, stubbles thinning, don’t want to feed – sell. It won’t collapse the market, but it may apply the brakes for a few weeks.

Price resistance is just starting to appear domestically as wholesale values lifted faster than expected just as the shop front pricing was coming down. Swings and roundabouts.

Mutton pricing has a little wait, but I think with a natural price reaction to the lamb price shift March and April bode well. The mutton discussion on The Weekly Grill with Kerry Lonergan and Matt Dalgleish has created some interest. Why don’t we have mutton on the shelves in Australia?

With cost of living being front of mind mutton seems to be a natural marketing progression. We have export beef on the shelves so what’s the difference. Over Xmas I cooked mutton in a smoker.

The legs and ribs were fantastic, we minced some and even the chops ate well when treated right. Any way just a thought as the flavour was really good especially with a Kalleske Moppa from  Greenock in the Barossa Valley. Maybe an MLA / Wine producer combined campaign – more mutton eaten and more wine drank, win-win?

Warren Johnston, Senior Livestock representative, Nutrien Tasmania. Season is ok but starting to dry now. Lambs and cattle are on par with the mainland with freight differential considered.

Lamb ad too woke?

I look forward to Australia Day every year and the Lamb ad. I think the Advertising company came up short this year. Not enough of Sam K, Not one Australian flag in the shot and leaning too much to the woke agenda. Leave the woke stuff to Pat Cummins and Cricket Australia.

They are doing a great job of stuffing things up. Having spent days at Adelaide Oval watching the Windies in the 80’s how good is Shamar Joesph, he brought some spirit, fun and humility back to the game. Old fashion cricket and a deserved win to the young Windies side who are proud of their country’s flag.

Scanned-in-lamb ewe update

How is the scanned-in-lamb ewe trade going? Many have asked, so here is the update.

We shore the 90 (lost 2) ewes and moved them to another block with an estimated value of $35 in November and a total cost of about $180 per ewe inclusive of dry lick, shearing and transport. So it was looking like a serious shit show the same as many others. Lambing finished at 130pc saleable lambs (12 foxes and 1 dog with the Thermal). Pre Xmas lambs were worth $40 so I picked up the handpiece and shore them, love shearing but never again. In mid-January we sold the lambs with an average of 45kg for $120 on property. So the trade is coming back on track but still a bit to do. Three bales of wool in the shed and 90 ewes getting re-joined. What looked like a net loss is now starting to get its head above water again. The saving grace is we purchase younger large frame ewes. The story continues.

Training: Very positive announcement that RMA Network and Wodonga TAFE have created a three-year partnership with MLA for the expanded delivery of their Agency and Supply chain training program.

The support from the MLA Executive through Keely Kovacevic, MLA Project Manager, Adoption Capability Building has been fantastic with all parties excited about the delivery which supports all parts of the supply chain from studs to end users.

The ACCC inquiry

It seems it is easier to bash business in Australia now than think about the economics behind any commercial operation. I hope the flagged enquiry by the Australian Competition and Consumer Commission remains mindful of a couple of drivers specific to the livestock supply to supermarkets. Since the early 90s, both the major supermarkets have consistently put their specifications to the market and taken supply at better than market rate to ensure continuity of supply. There have always been some bumps and heated words, the same as any seller / buyer negotiation, but overall, the relationships have been very long-standing for sale yard competition or privately – lambs and trade cattle.

Now before you throw something at the dog, not every agent, grazier or feedlot gains access to these orders for a number of reasons. However, the truth of the matter is these supply arrangements for the major supermarkets are extra competition in the entire livestock system, in every state, for a large number of carcases every week. Many backgrounding or feeder operations buying in the markets have a supply arrangement out the other end allowing those orders to “keep the job right” for the right quality livestock.

If the ACCC inquiry decides to change the dynamics for whatever reason and supermarkets are taken out of the buyers gallery how will this effect saleyard and private sale pricing? Food for thought…. I don’t think it will be beneficial to the wider livestock community.

Cattle

Rain in December has grown confidence and this confidence allowed prices to return to a normalised base line. With 2023 behind us and continued rain in Queensland and NSW supply shortages are now coming into play. Weaners making $2.20 in November are now trading between $3.50-$4/kg and in Queensland topping at $5/kg. The weaners purchased early January are now creating weight and cents per kilo gains in the paddock. The feeder market has also broken away from the status quo for better quality feeders.

Sam Laffy, Kellco Rural Agencies, Dalby was desk bound this week with significant rain stropping everything. Feeder prices are topping $4 for EU cattle with flatbacks travelling at $3.70. Cyril Close, Topex, Roma said the rain has varied with 100 – 200mm one side of town yet only 10 to 20 on the other. Heavy feeders $3.80 – $4.00, Light feeders $3.60 to $4.00, Weaners steers $4.50 – $5.00, Heifers all ranges $3.20 to $3.65, Cows $2.65 – $2.75, Grass bullocks $3.20 ,and cows and calves topping at $1600. Staying in Roma Duncan McCleod, MAA Livestock and Property played the right cards early January securing some quality runs of weaners from the Southern weaner sales. I think we both thought the job might lift a bit, but this rain has made those cattle well worth the freight bill whilst supporting fellow RMA Network agents in the south.

Look towards WA for cattle buying opportunity. The West has copped a fair belting with heat and a short spring. Speaking to Sam Wakefield. Westcoast Rural, Esperance he said good quality cattle are starting to head east at the right price even with the taxi bill. 330 – 350kg rates range from $2.70-$2.90/kg on steers and $2.20 – $2.40 on heifers. Call early to avoid disappointment is my suggestion.

Demand. Last year I spoke of new processing capacity coming online for cattle with new plants,  additional shifts and upgraded chains. The demand is slowly starting to outstrip supply and it seems there is some real competition for the larger lines of pastoral and finished cattle appearing. EU, organic and pastured assured cattle are in demand and we are seeing some pencil sharpening appear amongst the processors and feedlots.

As normal March will see an influx of numbers as the bigger pastoral operations launch muster programs with a swarm of helicopters and drones taking to the air. This normally softens the pricing for a period, similar to the weaner sales – too many numbers stacked into a small window. I still believe April and May will be the time when we may see a significant shift on pricing as the US pricing and supply volumes into many international buyers forms a pricing differential that makes Australian product much more appealing.

Southern bull sales are here again. The selection gets better year on year and now is the time to put some thought into your selection. Work out how many you need and the breed, use the breed society data base search functions to find the best bulls to suit your operation targets.

Traits and phenotype selection allows you to cross out the bulls your definitely don’t want. Then take the time to speak with your stud stock specialist to refine your target bulls. Open eyes are important and sometimes you will need to change studs to meet your needs. This doesn’t mean your past stud has bad cattle they just don’t have the selection that meets your herd improvement and target market requirements. Calf weight gain is what pays the bills, so this is worth taking the time, not just look at the catalogue on sale day.

Weaner sales. One of the rare times producers receive the right value and the buyers can still see a margin, especially on well weaned cattle. Everyone has read the market reports, so this is a brief summary. Unweaned calves copped a 20 cents discount, weaned calves presented in excellent order for buyers, EU accredited cattle were in demand, buying was sensible with many locking their rates at $3 – $3.30 on Angus steers however heifer prices moved considerably starting at $2.40 but quickly heading towards $3. Transport, feeding and spelling yards at Barnawartha, Deniliquin and Forbes all came into play with the northern demand. A key component for any sale yard now is soft flooring if they want orders from Queensland and Northern NSW to operate. Foot soreness is an issue that cannot be fixed quickly so buyers started to avoid the concrete yards.

Dairy. Great chat with Rob French, National manager for Elders Dairy division. Milk prices continue to hold at good levels however the dairy heifer export price has followed the beef trajectory with rates now $1000 compared to highs of $2600 last year. Rob said the science in the dairy industry has seen sexed semen increasing the numbers of heifers available for dairies to select from leaving a larger pool available for exporters.

With genomic testing that now identifies a range of production and structural markers this has really moved the bar on animal performance and selection. Rob did say fresh milk supply has been a bit short. Speaking to one of my contacts in the milk industry she said “milk powder has been imported from overseas including NZ & China to be reconstituted to meet demand in Australia.”

Weaners for the sales are coming along nicely with the majority fitting into the 250 – 300 kg range and about 85pc Angus. The livestock in Tassie are excellent quality and should not be avoided; however, make sure you have your transport across the water booked well in advance and do your homework on the freight subsidies.

Agency training

Simone Dand, program coordinator for Wodonga TAFE is now a shared resource with the RMA Network that helps elevate this to the most comprehensive Agency and service provider training in Australia. Training is open to all agencies and supply chain business’, with the next course starting on 3 March at Wodonga. Simone said: “Wodonga TAFE have expanded their intake to include workshop only entrants as well as the full Certificate 4 in Agriculture. This also provides AuctionsPlus assessor training. The course cost includes accommodation and food whilst at the workshops”. Simone’s phone number is  0455 240 307

Opportunities

 Clean out your old bulls / rams and upgrade – do the homework before the sale

 Older ewes with some wool (sound mouth only)

 Don’t be lazy and finish your stock, you’ve done the hard work.

 Custom feeding your home bred cattle – make some enquiries

 Utilise agency networks to find livestock worth the coin.

 Livestock finance – there are some good deals available.

 Get your assurance program registrations done – its worth the time.

 Keep training.

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Comments

  1. Bill Bruce, February 9, 2024

    I always enjoy Chris’ reports and thoughts. Just on mutton, I came across a butcher shop in the Adelaide Hills with his specials board outside – rump $19/kg and mutton backstrap $24/kg. A few months ago you could buy the whole sheep for $24.

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