800px-Merino_ewes_&_lambs-crop

The dry weather that afflicted southern lamb zones in 2024 has carried over into 2025, with January rainfall on track to be at the very bottom of the range for much of Victoria, South Australia and southern NSW. With little in the way of summer fodder left in paddocks, we’ll take a look at the margins on feeding lambs this year.

Summer rain is generally not vital for southern lamb operators, but many producers will try and take advantage of any falls with fodder crops to finish lambs.  Fodder crops have been better this year than the disaster that was 2023-24, but they are now running short. 

The finished lamb supply out of the south will now be largely coming off supplementary or full feed regimes.  Looking at store lamb price, we can see that prices have been relatively steady across the spring and summer.  Figure 1 shows the Eastern States Trade Lamb Indicator (ESTLI), the NSW Restocker Lamb Indicator and the Online Lamb Indicator, which is reported in dollars per head.

In cents per kilo terms, restocker lamb prices are lagging the ESTLI.  We need to remember that the Restocker Lamb Indicator includes Merino lambs, and if we delve into the data, we can see that Merinos are generally a drag on cent per kilo prices, last week sitting at 426¢/kg cwt, while crossbreds were at 746¢.

The Online Lamb Indicator has been ranging between $110 and $125 per head for much of the spring and supply.  Interestingly, the Online Lamb Indicator didn’t rally as strongly as finished lambs in December.  This tells us that restockers and feeders weren’t confident the price rise was going to be sustained, which as it turns out was correct.

Feed grain prices have been relatively steady since the harvest of 2022, which has at least taken some of the uncertainty out of the equation.  Depending on location feed barley or wheat will cost $280-330/t at the moment.  Protein is more expensive, with mixed rations for lambs coming in at around $400-450/t.

The variable that will determine if money will be made on feeding lambs, as always, is the selling price.  Figure 2 shows that apart from the December spike, lamb prices have been relatively steady for the past six months.  The surge in supply seen in early January will likely be followed by fairly consistent numbers coming off feed.  

How the supply compares to slaughter demand will determine whether prices rise, fall or remain static.  If we had to take a stab, we’d say prices would continue to bounce around in the 780-850¢ range, but it’s hard to know. 

Note: The trade scenario calculation in Figure 3 does not allow for an assumed feed costs (that may or may not reflect your specific geography or requirements), freight, shearing or administrative costs, these will vary between enterprises and should be calculated on a case by case basis when considering any trade. 

What does it mean?

Figure 3 shows a rough budget for feeding lambs.  If prices fall into the low 700s margins will get tight, but at 850¢/kg cwt there is good money in feeding lambs.

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Key Points

  • Many lambs will be supplementary fed or going into feedlots for late summer and autumn supply.
  • Store lamb and feed prices have been relatively steady since the spring.
  • Prices remain better than 800¢/kg cwt there should be money feeding lambs.

Click on figure to expand

Click on figure to expand

Click on figure to expand

Data sources: MLA,  Mecardo

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