The winter saleyard slowdown for sheep is upon us as we enter a new financial year and most producers have offloaded the extra mouths they have earlier in the season.
The strong slaughter figures have been well
documented this year, and high saleyard throughput goes hand in hand. Sheep yardings for the year-to-date are averaging about 87,000 a week. For the past
10 years, the weekly average sheep yardings have only surpassed 80,000 in 2018 and 2019. The next highest average weekly figure outside those years was last
year’s 72,000. Both the five and 10-year average weekly throughputs sit at around the 66,000 mark.
Looking at Figure 2, we can see that sheep yardings for the second half of both 2018 and 2019 trended more firmly above the five-year-average than they did for the first half – which is seasonally common after a winter lull, but reconfirms that sheep yardings are likely to climb even higher this year.
The similarity is that 2018-19 was also a flock turnoff period, prompted by dry seasonal conditions setting in. The difference this time around is that the liquidation of the flock was more influenced at the beginning by a maturation of flock numbers, albeit a lack of rain in certain regions is now playing a role.
We can see from Figure 1 that despite a seemingly similar supply of sheep in 2018-19, the price trends haven’t followed suit. In fact, despite high yarding figures, the annual average mutton price increased year-on-year in both the 2018 and 2019 financial years, with last year being the first time that the average price has decreased year-on-year
since 2015-16.
What does it mean?
What’s the missing piece of the puzzle causing current sheep prices to be close to 200c/kg lower than the same time in 2018 and 2019? It would appear to be restockers. And while some sheep-producing areas are certainly dry enough, it definitely isn’t as dry across a big of an area as it was in 2018-19, so that isn’t the only handbrake.
Higher overall flock numbers are definitely part of the equation, as many sheep producers would have built up their numbers organically during the flock rebuild. However, the domestic economies’ weak growth, the restrictively high interest rates (more than 2% higher than in 2018) and the continued increase of input costs are the other puzzle pieces. And this will likely limit any significant upside to the mutton market for the remainder of the year.
Key Points
- Weekly sheep yardings are averaging record levels for the year-to-date, and unlikely to diminish for the remainder of 2024.
- Previous similar yarding averages were from 2018-2019, however average mutton price rose in those years. .
- Slow domestic economic growth and high interest and input costs stifling restocker action, and limiting upside on sheep.
Click on figure to expand
Click on figure to expand
Data sources: MLA, Mecardo
