RESTOCKER lamb prices reached extreme levels of more than 1200c/kg carcase weight this week as the supply scarcity sweeping the industry boiled over at Hamilton on Wednesday.
The National Livestock Reporting Service quoted the Hamilton saleyards’ light trade and light weight lamb prices lifting $5-$10 and very light weight store lamb rates up to $20-$30 dearer as costs exceeded 1000c/kg at times.
The NLRS quoted 0-12kg cwt lambs as making $44-$110, or 686-1225c/kg, at Hamilton, an average of 1030c/kg and a rise of $30 a head. The ESDI for restocker lambs went up 24 cents yesterday to 754c/kg. The last time the restocker indicator hit similar levels was in April 2011, when it peaked at 749c/kg.
Restockers were busy and competed hard to fill their orders buying well-bred store lambs for mostly $108-$134 and lighter pens from $44-$110. Light weight 2 score shorn lambs sold from $100-$117.
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Kerr and Co Livestock yarded 6000 store lambs in Hamilton on Wednesday and agent Andrew Gunn agreed with the NLRS restocker lamb ranges and said there was a frenzy of bidding to secure the large runs. He said the store lambs, including 3500 from one client and 2500 from another, “comfortably” averaged 750c/kg carcase weight, or from 700-1200c/kg carcase weight on Wednesday.
“There is a shortage of lambs, and the supply and demand process is definitely working, that is the situation.
“It is the dearest store lamb sale that I have ever experienced in my whole career.”
The lamb and mutton supply shortage was such that a number of beef, sheep and lamb abattoirs were only working four days a week, he said.
“At this time of the year it is unheard of.
“Everybody is battling for supply at the moment.”
Need for forward contract policy review
Mr Gunn said the store lambs offered on Wednesday were very suitable for finishing and well-bred, out of composite ewes by Poll Dorset and Romney rams. All of the store lambs were suitable for the Middle East kill export market.
“But the store demand is so much stronger above the kill price,” he said.
Mr Gunn said the situation highlighted the need for a re-examination by exporters of their forward contract policies. Although there were good solid forward contracts for last spring, processors didn’t necessarily need to offer forward contracts for the peak eastern states turn-off period of late October through to the end of December.
“What they should be doing is encouraging people to do buy lambs and turn them out for supply under forward contracts for February, March and April, and then I don’t believe they would find themselves in as big a predicament.”
Kerr & Co Livestock auctioneer Craig Pertzel said the store lambs were all sold to restocker orders in the Wimmera and South Australia, with some of the 8-10kg cwt lambs made $96-$110.
“I’ve never seen store lambs as dear (cents/kg).”
He expected the store lambs sold on Wednesday would not hit the market again until July or August this year.
“They were just bought by agents for clients to put out.”
Wimmera order bought the heavier store lambs
Rodwells Wimmera manager Wayne Driscoll said he paid up to 900c/kg for store lambs at Hamilton on Wednesday, paying mostly around $121 for 15kg cwt lambs, and competing mainly against Midfield Meat.
“We were buying the better end, but as you go lower, 10kg lambs for $100 is probably right.
“We were trying to buy the better end with a bit more weight, but we were still paying plenty for them,” he said.
“It’s just the vagaries of the market and you just go with it.
“If the top end goes everything follows along and that’s how it works.”
Mr Driscoll said his client aimed to take the 14-15kg cwt lambs through to 25-26kg and aim to achieve $170-$180 selling price.
“We’re not putting a $200 price tag on them, if we can get out of it with $30-$40 take home price (margin above costs) out of it, well so be it.”
No upside in extreme lamb prices
Mr Driscoll said he had bought a lot of lambs earlier at lower prices earlier and had been averaging quite good margins.
“There is no upside in this, in what we’ve seen this week; they are levels where the processors are under enormous pressure.
“So if we can get them to settle in that 600 cents and a bit category then we are OK, but 700 cents-plus for heavy lambs is ….,” he said.
“Sharp prices and share falls (in price) are the biggest problems we have as an industry.
“We need to iron those things out a little bit and get them to levels where everyone can operate.”
Mr Driscoll said the problem had been building with the reduction in the ewe numbers nationally, as indicated by the scarcity of sheep available for mutton processors.
“We have less people with ewes out and you don’t have the lambs.
“The eastern seaboard doesn’t have the lambs that we once thought we had.”