Despite another drop in throughput, the lamb and sheep market this week was showing signs of supply fatigue in what has been a red-hot start to the year.
On the East Coast, combined lamb and sheep
yardings for the calendar year to date have already exceeded 2 million head
which is significantly higher than the start of any season in the last decade,
(2018 was the next highest at 1.67 million head).
Even with favourable export market
fundamentals and an improving outlook from weather to interest rates, this
level of recent throughput is always going to cause short-term downward
pressure on pricing. Despite a relaxation of numbers this week, pricing still
took a tumble; there is just plenty of stock to choose from at the moment for
restockers and processors alike.
Based on preliminary reports from MLA, this
week’s yarding was still 28% higher than the 5-year average for this sale week.
East Coast Sheep yardings fell 24% WoW but
did little to alleviate shifting demand for mutton as the National Mutton Indicator
lost 72ȼ to sit at 210 ȼ/kg cwt,
essentially repealing the gains of the last month.
After a gigantic yarding last week in
Tasmania, yardings on the Apple Isle returned to the usual operating level
which contributed to the 8.3% reduction WoW in lamb yardings on the East Coast.
Eastern States Trade Lamb Indicator (ESTLI) still lost 43 ȼ (-7% WoW) to 639 ȼ/kg cwt.
Saleyard reports in NSW and Victoria noted
that significant buyers were less inclined to bid or were not present
altogether. Finished lamb pricing
declined again as a result as the National Heavy Lamb indicator losing 47 ȼ to settle at 648 ȼ/kg cwt.
Next week
Processor demand has been strong as Figure 2 shows, but at this level of supply, short-term competition from the processing sector will likely be opportunistic as opposed to a given.
Numbers to the yards will need to continue to retreat to 5-year average levels to normalise pricing for lamb markets.
A short week, and closed saleyards on Thursday has culminated in some relief on the supply front as combined lamb and sheep yardings nationally dropped
Despite a decrease in yardings week on week, the tightening of supply was not enough to support prices. Middle East airspace closures impacted demand at
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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.
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The Endless (Supply) Summer
Next week
Processor demand has been strong as Figure 2 shows, but at this level of supply, short-term competition from the processing sector will likely be opportunistic as opposed to a given.
Numbers to the yards will need to continue to retreat to 5-year average levels to normalise pricing for lamb markets.
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Data sources: MLA, Mecardo
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
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.
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.
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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.