Winter supply fears push trade lamb prices surely over 700c/kg

Terry Sim, June 13, 2018

These 35.2kg cwt July-August drop composite-first cross export lambs at Goulburn NSW made $223 or 634c/kg cwt on AuctionsPlus yesterday.

TRADE lamb prices have started to climb consistently above 700c/kg in eastern states saleyards as processors scramble for immediate kill and forward supplies in expectation of a tighter winter-spring supply period this year.

Producers are wondering now if prices will reach 800c/kg as stock agents report increased saleyard buying from domestic and export processors – some of which reportedly have insufficient lambs contracted direct to their plants.

Some processors are also outbidding competitors and restockers in saleyards to secure lambs for further fattening on their own farms, further boosting trade weight lamb prices.

Increased slaughter rates earlier this year and lack of rain across New South Wales and Victoria are also pointing to tighter supplies leading into a delayed or reduced sucker lamb turn-off in August and September.

At the Forbes saleyards yesterday, the venue continued to yard fewer lambs than it would normally do this time of the year, with agents offering 24,550 lambs, 50 more than last week.

The National Livestock Reporting Service said lamb quality was very good, particularly for the heavy trade and heavy weight lambs. Mainly trade and heavy weights were penned, plus the usual secondary plainer lines reflecting the seasonal conditions.

Competition was stronger, particularly on trade weight lambs, with medium and heavy trade lambs selling $10-$12 dearer and averaging 670-680c/kg cwt, but with plenty of sales over 700c/kg. Most of the better heavy trade weights sold from $160-$174. Light lambs to the processors were $8 dearer and averaged $123. Heavy weight lambs sold firm to slightly dearer and averaged 620-650c/kg. Extra heavy weight lambs made $200-$216 and heavy Merino lambs sold to $156.

Forbes stock agent Scott Reid from VC Reid and Son said lamb numbers have been dropping for the past two weeks.

“Yesterday a lot of trade lambs here made 700c/kg-plus, with both supermarkets going a lot stronger than they have been the last couple of weeks.

“That’s a sign that they are not getting heaps of lambs over the hooks, they’ve got to come and compete in the market,” he said.

Mr Reid also expected export buyers might soon have to compete with supermarkets for 25kg lambs as heavier lambs becoming scarcer.

A few processors were buying lambs to put away on grass or feed, he said.

“The writing is on the wall that the sucker season is not going to be as early as it usually is.

“We are normally yarding suckers from next month, but it won’t happen here,” he said.

“Even if it rains now, I don’t know whether we are going to have a lot of suckers about; I think a lot of them are going to have to be shorn.

“It is going to be a struggle here for a couple of months, even if it does rain.”

Some restockers were still putting lambs away, but not in big numbers, Mr Reid said.

“It’s hard to compete against the bag lamb blokes at the moment.”

Ballarat lambs lift $5-$6

At Ballarat yesterday, agents yarded 19,805 lambs, 42 fewer than last week, with most being good quality trade weight and heavy runs.

The National Livestock Reporting Service said trade weight lambs sold $5 dearer, heavy lambs made $6 more and the extra heavy lambs were mostly firm. The best heavy lambs reached $228 and there were 13 sales above $200. Heavier trade lambs sold from $152-$173 to average 655c/kg. Unshorn lambs over 24kg cwt made $150-$168. Restockers and feeders paid $113-$145 for lambs, and $70-$90 for smaller lighter lambs. Restockers paid $43-$60 for shorn, light young Merino wethers.

Light weight 2 score lambs made $71-$114, and light trade 2 and 3 score lambs sold from $117-$144.50, to average 675c/kg. Trade weight 3 and 4 score lambs sold from $142-$159, with heavier drafts making $152-$173, or 625-710c/kg, at an average of 655c/kg. Heavy 3 and 4 score lambs sold from $168-$198 and averaged 630-640c/kg. Extra heavy export lambs made $196-$228 at 595c/kg.

After taking “baby steps” for five consecutive weeks, Charles Stewart and Co agent Jamie McConachy said lamb prices took a bigger step, aided by Monday’s public holiday.

“Through March-April-May, the contracts that were available were a long long way ahead of what lambs were making in the marketplace, and in some cases, particularly earlier on, lambs were making sometimes between 50-100 cents more in contracts than in saleyards.

“But that gap has now closed to absolutely nothing and in actual fact I think the marketplace is now overtaken what is available over the hooks – so it has been a very interesting ride,” he said.

“For those who took the gamble and took the contracts have had a great win, but for those who have been able to hold on till now they are going to cash in also.”

Mr McConachy said light trade lambs are easily making above 700c/kg “and you could almost generalise that into trade lambs full stop.”

“Some companies are buying light trades to turn out and they’re making a long long long way better than kill price because they have the luxury of being able to put them out for a month or six weeks and bringing them back into their own systems.

“We’ve got to recognise which lambs are going where before we start quoting too much,” he said.

“A lot of them (processors) are nervous about winter supply and we’ve seen these big contracts out at the moment of 670-680 cents in June and 690 cents next month, and that’s up to 26kg so they are pretty big rates.

“We could see some serious (lamb price) records broken this winter.

“Like it does every winter, supply drops away and prices go up, but this year might be even more so that way, because the season hasn’t allowed for these lambs to extend their life,” he said.

“Lambs into July and August are going to be very far and few between.

“So we could see some big prices; there are blokes out there, I heard already yesterday blokes murmuring ‘its’s going to be $8, it’s going to be $8’,” he said.

“We are certainly on the cusp of our typical general winter price spike.”

Click here for the Coles July forward contract for Gundagai and Colac delivery.


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