Stanley Vale Merino Stud - News & Views

Lamb prices settle into winter

The majority of eastern states sheep and lamb saleyard indicators have steadied since early June, after a period of sharp gains.

A declining supply of finished lambs has seen heavy lamb prices (over 22kg cwt) continue to perform exceptionally well, reaching 907/kg cwt (carcase weight) on Tuesday, up 262¢ year-on-year and unchanged since 1 June. Strong export demand has translated into elevated saleyard prices, with processors competing fiercely in the face of declining supply.

With the expectation for supplies to further contract during winter, the modest easing trend for trade lambs (18.1-22kg cwt) is unlikely to be maintained. Last year, trade lamb prices briefly retreated during  August after a sustained rise during June and July, before kicking on to set highs in September. On Tuesday the Eastern States Trade Lamb Indicator (ESTLI) was reported at 866/kg cwt, up 216¢ year-on-year but back 1% since 1 June.

Restocker lambs (0-18kg cwt), have performed remarkably well considering the season. Prices have, however, seen a greater degree of volatility compared with other categories in recent weeks, underpinned by a scarce winter rainfall outlook. On Tuesday restocker lambs reached 841¢/kg cwt, up 244¢ year-on-year and a lift of 1% since 1 June.

Processor demand for finished lambs is evident, however restocker demand has also been driving prices. Price incentives are encouraging producers to supplementary feed lambs, despite the poor pasture conditions that persist. In addition, restockers have turned to the store market to help supplement on-farm production, with many producers facing the prospect of fewer lambs on the ground this winter.  NSW restocker lambs are trading at a premium to their SA and Victoria counterparts, driven by competition for a limited pool of early season lambs.

The Eastern States Mutton Indicator remains at historically high levels, reaching 584/kg cwt on Tuesday up 94¢ year-on-year, however back 2% since 1 June. In recent weeks, sheep slaughter has fallen below year-ago levels, which should provide future price support for sheep prices, particularly when considering the eastern states mutton indicator performed so strongly at the beginning of the year in the face of increased sheep slaughter.

© Meat & Livestock Australia Limited, 2019

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