Swings in supply disrupt the balance

Sheep packed into loading pen on a farm with dark clouds above

Supply pulled back significantly this week, likely in response to last week’s cheaper market. After the excitement of a rising market, it appears to be searching for its new level which should reveal in the weeks ahead.

The Eastern States Trade Lamb Indicator (ESTLI) on Thursday is up 9¢ compared to the close of last week. At the time of writing, it is sitting at 713¢/kg cwt, which is 6% below the five-year average for the ESTLI. Minor movements were made in trade lamb prices in the West, with the indictor down 5¢ to 557¢/kg cwt. It will be interesting to see how finished lamb prices perform after the holiday, once the fuel of the lamb campaigns wares off.

Heavy lambs also found some momentum on the tighter supply, gaining 26¢ since last weeks close to 738¢/kg cwt. Wagga reported noted that although competition for heavy lambs remained robust, buyers were cautious about exceeding 700¢.

The lighter weight categories didn’t manage to hold their ground. The National Restocker Lamb Indicator is currently sitting at 591¢/kg cwt which is 38¢ lower than last Friday. NLRS reports at Ballarat mentioned the number of lambs almost halved in this week’s sale, which spurred on stronger bidding there. However cheaper restocker values in Muchea and Forbes in particular dragged down the National Indicator.

Merino lamb values made the largest gains this week. The National Merino Lamb Indicator at 602¢/kg cwt lifted 61¢ or 11% since last Friday. This is only just below the high of 611¢ reached a fortnight ago.

Despite tighter saleyard throughput, mutton prices also slipped some of last week’s gains. The National Mutton Indicator sitting at 273¢/kg cwt is 14¢ lower than last Friday. 

As highlighted in this week’s analysis, slaughter rates tell us that processors have been able to lift their capacity. This can only be a good thing for price, especially if supply tightness is ahead.

Click on graph to expand

Click on graph to expand

Data sources: MLA | Mecardo

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