Supply shortage sandbag price falls.

Flocks of young unshorn lambs seperated, in the sheep yards, from their parents, out the front of the shearing sheds waiting to be shorn, on a small family farm in rural Victoria, Australia

With the final full-selling week of January ending, the lamb market continued to find its new equilibrium of supply and demand. Unfortunately for producers, this saw the value of all indicators fall week on week. There was a large reduction in the number of head moving through the yards this week, which helped offset the absence at the rail of some buyers reducing demand.

After a surge in supply with the commencement of sales, supported by fierce competition at the rails from buyers, indicator values fell through the week. The largest fall was the light lamb indicator, losing 3% in value week on week to finish at 707¢/kg. Wagga was the dominant saleyard for the indicator, contributing a fifth of the total yardings and had the highest average selling price. Despite trading at a 13% premium to the indicator, its saleyard mentions not all the usual buyers operated.

Mutton had the largest decrease in yardings week on week, falling by 37% from last week’s gigantic 101k head. Despite the large reduction in supply, the value of the indicator still fell. The National Mutton Indicator closed the week at 351¢/kg. Ballarat was in second place regarding yardings behind Wagga. Its saleyard report talked to a drop in quality compared to the week prior resulting in a softer market.

Eastern State Trade Lamb Indicator was back only slightly, by 1% to 793¢/kg whilst yardings fell by 11%. Top contributing saleyard reports all have a similar theme, slightly less competition with one or more operators absent, the premium for the pens with great weight and quality, but a tail of dryer and plainer types causing a softer market compared to last week.

Initial yardings data from the MLA show a reduction in total yardings of 25% compared to the week prior. The driving force behind the decrease was sheep, back 43% on last week, whilst lambs were only back 8%. When looking at the same week last year, the trend is the same with 2 large weeks of high volume of throughput when the markets reopen, followed by a significant drop in the 3rd week of operation. Last year when comparing the 2nd week of sales yardings to the 3rd total yardings fell even more significantly, lamb and sheep were both back by 44% according to the NRLS.

Slaughter for the week prior rose by 1% on the week before, making it the largest week of slaughter since 2012 for lamb and sheep. There was a shift in the composition between lamb and sheep, with sheep increasing week on week by 10% and lambs falling by 2%.  

Lamb Australia recently released their latest TV ad ahead of the Australia Day long weekend, this year it aims at the comments section found online social media platforms and the negativity that can come with them. Lamb comes out as the victor uniting everyone with Sam Kekovich delivering the tagline “Out of the comments, and into the cutlets”. With the level of lamb production expected this season, here’s hoping plenty of punters get stuck into some lamb this weekend. 

Next week

A short selling week with the national public holiday on Monday, will see some markets not operating, which will lead to a decrease in yardings overall. Some rainfall is on the radar for the east coast, but nothing too significant. This will be welcomed by those who receive it but fail to impact the market. Expect to see the continuation of the market finding the equilibrium between supply and demand following the festive shutdown.

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Data sources: MLA, Mecardo and BOM

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