This year could well be the tale of two springs when it comes to growing grass, as many across the southern states wait for rain this week. Those that have had higher rainfall through the winter are still looking well placed to capitalise, while those that were already low on moisture are looking to the skies.
Reports from Meat & Livestock Australia
are that this year’s lamb crop is a bumper thanks to a strong autumn in the
south, which could create more opportunities for trading in and out of lambs
than usual. So, who is in the box seat, the store lamb breeder or the fat lamb
feeder?
The restocker lamb indicator (lambs 0-22kg
purchased by feeders or restockers) closed last week at just shy of 660¢/kg.
This was 62% stronger than the same time the previous year, but still about
50¢/kg shy of the five-year average for the corresponding week and 10¢/kg below
the 10-year. The restocker price generally follows an upward trend from now
through to the end of summer. The five-year price rises 13% between now and the
first week in March, while the 10-year price climbs 5%.
Looking at the other side of the equation,
eastern states’ trade lambs are at 808¢/kg, close to double the same time last
year and now above both the five and 10-year average prices. The trade lamb
price does generally dip as we head further into spring and supply ramps up,
but still finishes summer higher than it is now, between 4 and 8% according to
the two averages. Heavy lambs are trading at an even larger premium to the five
and 10-year average returns, even after losing nearly 30¢/kg in the past week.
At 821¢/kg, it is 46% stronger than the same week last year, and 13% above the
five-year price. They follow a similar price trend to trade lambs through until
the end of summer.
Using these current weeks-end prices, a
16kg restocker lamb will set you back $105 a head. If you were selling into the
same market, a trade lamb weighing in at 25kg would return $202, while a 30kg
heavy lamb would come back at $205. Now if you’ve got the right feed on hand
for a 200g/day weight gain, you’d need about eight weeks to turn a restocker
into a trade lamb. The price on average is about 5¢/kg cheaper then, meaning
you’d gross about $95/head (transport and the like needs to come off this off course).
What does it mean?
Luckily for sheep producers market indicators across the board are well above where they were trading last spring, despite there still being plenty of supply about. That said, slaughter has come back below year-ago levels in recent weeks, perhaps as the right product gets harder to find with plenty of producers in the south a few weeks behind usual timelines due to a lack of moisture. What is more telling for this scenario though is looking at longer-term averages, which show us the restocker article is still at a favourable price compared to the finished lamb – if you’ve got the feed.
Key Points
- Restocker lamb price has been on the rise but still sits below the longer-term average price.
- Trade and heavy lambs trending above the five and 10-year price points, despite slaughter still being above average. .
- Lamb trading opportunities favourable for those with feed to spare
Click on figure to expand
Click on figure to expand
Data sources: MLA, Mecardo
