Sudden crash landing a quality concern


It was a horror week on the sheep & lamb markets, with the key indicators the ESTLI and NMI booking big falls, and all other indexes followed suit. The worrying issue here is that there are indications that this was demand driven, not supply driven. Commentary across some key markets about the general poor condition of the stock on offer, especially in VIC provides some hope that the problem is quality, not buying interest in general.

There is a distinct feeling that the sky might be falling this week, with all sheep & lamb indicators running red as prices suddenly plunged. The carnage was worst on the light & Merino lamb front, which both clocked up falls in excess of 100¢/kg cwt, or 16% for the week, closing at 539¢/kg cwt and 541¢/kg cwt respectively. The Eastern States Trade Lamb Indicator (ESTLI) plunged 62¢(8%) down to 680¢/kg cwt, while heavy lambs proved to be the most resilient, only dropping 35¢(5%) to settle at 712¢/kg for the week.

On the sheep front, the NMI was not spared, slipping 27¢(7%) down to 476¢/kg cwt, despite a significant drop in supply of eligible yardings from the prior week in the order of 50%.

Preliminary yardings statistics told an interesting, but worrisome story. Trade lamb yardings were relatively steady at 16,848 head, as were Restocker volumes, at 4,066 head. The static volumes, combined with a steep fall in prices are indicative that a significant chunk of demand in the market this week was suddenly and brutally withdrawn. Heavy lamb volumes fell by 24%, which explains why prices held up better than some of the other specifications.

The demand situation for light and merino lambs is more of a concern though. Despite a week on week fall in yardings of ~19% for both specifications, the heavy price drops observed suggests that the rug has been pulled out from under them in terms of buyer interest. It’s more than possible that large numbers of poor quality offerings could be dragging the average down though.

Last week’s east coast sheep slaughter backtracked  8%, falling to  63,077 head, driven primarily by a huge 33% fall in the numbers going through VIC processors to a level half that of the prior month.  Lamb slaughter last week remained fairly steady, at 361,931 head.

Several market reports out of NSW indicated that VIC buyers have been coming to NSW in search of better quality stock, and not all processors in VIC have been actively buying, which provides some explanation about the subdued prices this week. It’s possible there just aren’t enough high quality lambs out there that fit what buyers are looking for currently, and there are a flood of sheep & lamb in wintery condition pushing prices down at present.

The week ahead….

Given what seems to be a sea of pretty average looking sheep and lamb coming to market right now, and demand from buyers for better quality stock, it’s probably time to reassess whether it’s an ideal time to offload lower performing mobs of sheep at present, or to wait it out a bit longer. In VIC, producers with stock in good condition may be able to take advantage of the tight supply in the region at present.  

Have any questions or comments?

We love to hear from you!
Print This Post

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources: MLA, Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!

Want market insights delivered straight to your inbox?

Sign up to the mailing list to get regular updates to new analysis and market outlooks

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.