Soaking spring rain has moved from the outlook to the forecast this week, and with the weather warming up, feed is going to be abundant. It’s that time of year when NSW Merino wether lambs start to hit the market, and it’s that time to look at how the trade is shaping up this year.
Merino wether lambs start to flow out of NSW in the spring, and while we expect supplies to be weaker this year with the flock being rebuilt, they are already starting to appear on AuctionsPlus.
Figure 1 shows that in saleyards Merino lamb prices have been on the rise. The saleyard indicator is for Merino lambs which go to processors, but it’s a counter-seasonal move, and is being reflected in Merino store lamb markets. The NSW Merino Indicator is 100ȼ above the same time last year, and this is largely in line with the lamb market in general.
On AuctionsPlus store weight Merino wethers are doing better than the finished variety in saleyards. Last week lambs between 25 and 30 kilograms liveweight were making around 430ȼ/kg lwt. This is great money for Merino lambs, it translates to 1020ȼ/kg cwt, way above the finished lamb price in saleyards.
Still, when compared to the $150-180/head being paid for store crossbred lambs, Merino wether lambs look relatively cheap, even if they are lighter. With light Merino wethers the timeframe to turnoff will be longer, but being cheaper, they might be a less risky option than crossbred lambs.
With fine wool at such a strong premium to medium wools at the moment estimating margins on buying Merino wethers is difficult. Here we have used 19 micron prices, but for 18 micron wools $8.50 can be added to the income, and 17 micron will return an extra $15.
To gain the 22 kilograms liveweight to get lambs to a sale weight of 50kgs will take around three months or more, so we are looking at lamb prices in January. Figure 1 shows that last year Merino lambs were making 750ȼ in January, so we are using 700ȼ as the weak price, and 800ȼ as the strong level.
What does it mean?
The table in figure 2 shows that good margins are on offer for fattening and shearing Merino wether lambs. While the timeline is longer than for crossbred lambs, the extra stream of income from wool lessens the risk of supply gluts and lower lamb prices. There is more seasonal risk in buying lighter lambs, however, given the longer timeline, but with a good crop on the way, demand for store lambs is likely to hold up if lambs have to be sold off shears.
Key Points
- Store Merino wether lambs are starting to hit the market, making very good money.
- Wool prices vary widely with micron, and will have an impact on margins.
- Even at weak finished lambs prices, there is a reasonable margin in shearing and fattening Merino wethers.
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Data sources: MLA, AuctionsPlus
