How do the size of yardings move prices in Wagga

Mob of sheep moving in dusty yard

Talk to any farmer or local agent, and they will tell you that local supply has an impact on local prices. Many a grower will hear the yarding is going to be big and worry about prices falling, or vice versa. Does a strong price move encourage more lambs into the yards? Here we crunch the Wagga numbers.

On the surface, it does make sense that more lambs in a particular saleyard will mean lower prices.  However, the lamb market is a complicated beast, with supply & export, domestic & restocker demand, all having an impact on prices.

Figure 1 shows Wagga’s average trade lamb prices, along with yardings for the last 20 years.  In terms of relationships, it tells us little.  It is interesting to note the increase in yardings in the last few years.  This is presumably in line with growth in meat sheep in the Wagga area, and possibly some shift away from direct selling due to the strong price of recent years.

To assess the relationship between supply and price on a weekly basis we produced the scatter chart in Figure 2.  This shows the weekly change in price, versus the weekly change in yardings.  There is a weak positive relationship between that change in yardings and the change in price. 

This is counter-intuitive in that you would think larger yardings would equate to lower prices. If we lag yardings by one week, the positive relationship gets stronger.  This suggests that stronger price will see more lambs hit the yards, and vice versa.  The relationship is still very weak however, and could simply be due to the general rising price trend over the last 20 years.

With Wagga being a Thursday sale, an argument could be made that yardings will be impacted by prices at other yards earlier in the week.  A weaker trend for the week might be met with lower yardings at Wagga.  

What does it mean?

There is plenty of price data to delve into the Meat and Livestock Australia (MLA) website, but this broad analysis somewhat debunks the theory that local changes supply will impact prices on the day. Other supply and demand factors appear to be having a stronger influence on price than local supplies.

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Key Points

  • When local supplies change, there is the expectation that prices will move with them.
  • The supply and price data from Wagga shows a weak positive relationship between supply and price.
  • Broader supply and demand factors appear to have a stronger influence on Wagga prices.

Click on figure to expand

Click on figure to expand

Click on figure to expand

Data sources: MLA, Mecardo

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