Cash splash as heavy lamb throughput begins to plummet

And not just in dollars per head, but also in cents per kilogram rates, which remain above 800 cents a kilogram despite a softening of the market this month.

Last week, any lambs 18 kilograms and above were making 840c/kg over the hooks in NSW, including those 26kg and heavier, according to the National Livestock Reporting Service.

In Victoria, where the season has been kinder in areas, prices were more varied, with 16 to 22kg lambs averaging 800-808c/kg direct, while 22-26kg lambs averaged 830c/kg, but those above 26kg made the most at 840c/kg.

Saleyard prices averaged from 688c/kg to 759c/kg for the same weight categories, with the returns climbing higher with weight.

The eastern states heavy lamb indicator closed the week at 816c/kg, down from the highs of more than 900c/kg early in the month, but still 216c/kg above the same time last year.

Light lambs are also well above year-ago price levels, but sit at more than 50c/kg discount from heavy lambs, and Meat and Livestock Australia market intelligence manager Scott Tolmie said this was primarily because of availability.

MLA data shows 22-30kg heavy lambs made up just 19 per cent of the total lamb offering last week, compared to 36pc eight weeks previous, while restocker lambs offered have lifted 11pc from the previous year, even though lamb yardings overall are down 18pc.

“Heavy lambs have been a rare find and getting even rarer,” Mr Tolmie said. 

“The percentage of lamb supply is dropping – last week it was below 20pc when typically it sits between 30-40pc.”

He said new season lambs hitting the market later than usual had brought the market off the boil slightly in recent weeks, and processors had adjusted their orders given the record run on prices.

But without significant rainfall, pressure will mount on the light end of the lamb market and the gap will grow between it and the heavy end.

Mecardo analyst Angus Brown said even though light lambs were receiving a discounted price from heavy lambs, prices were still “very good”, offering producers a strong incentive to turn them off as quickly as possible.

“They are still getting $140 to $150 for light lambs,” he said.

“While that is happening it will continue to limit heavy lamb supply as producers will be worried about the season and worried about feed.

“There is every chance that light and trade lamb prices will get further discounted to the heavy lamb price – as processors will still want heavy lambs - but will have to offer a very good premium to encourage people to carry them through.”

Mr Brown added that those in the position to buy in light lambs had a good opportunity to make money, as relative to the finished lamb price they were quite cheap.

He said current Merino lamb prices were returning half the investment with the wool they cut.

McKean Mcgregor senior livestock agent Alex Collins, Bendigo, said the lamb market was going through a period of consolidation as more lambs hit the market from southern Victoria and South Australia.

But a lack of lambs coming out of the north would regulate supply, and he expected prices to stabilise in the high 700-800c/kg region.

“I think anyone that can get their lambs into export category is going to be very well rewarded,” Mr Collins said. 

“Given the strength of the market at the moment producers are encouraged to just to get their sheep to light trade and trade weights and turn them off, as there is not an excess of feed anywhere other then south west Victoria.”