With the spring price decline setting in motion last week, producers weren’t as willing to risk another weaker market at saleyards. Throughput declined but it wasn’t enough to prevent prices from falling steeply across most categories. It wasn’t all bad news this week, however.
Mutton has come under pressure in the last four weeks, with
unseasonally strong supply the driver. Last week over 170 thousand sheep were
processed in the east which is the biggest week of mutton kill since April and
over 40k (33%) more than the same week last year. The result? The National
Mutton Indicator has dropped 88¢ in four weeks, and 35¢ in the last week alone.
Currently sitting at 277¢, mutton is at its lowest point since May. And at a
65% discount to lamb, this a wider than the 50-60% discount we’d expect.
New season lambs are presented with mixed quality in many
yards and sold into a weaker market. Wagga’s saleyard report noted “signs of
dryness attributed to severe frosts in the region”. Overall, the Eastern States
Trade Lamb Indicator fell 26¢ over the week and 34¢ in the west. Heavy lamb prices
also lost around 39¢ on the week to average 783¢/kg cwt.
Restocker lamb prices were the one bright spot in NSW and
VIC, with both trading within their recent range. In NSW restocker lambs saw a
45¢ improvement week on week, to 742¢, while in VIC they are looking
comparatively cheap at 657¢. The divergence in both conditions of new season
lambs and restocker demand is clearly reflected in the spread between states.
Although the end-of-week results left more to be desired, news
released earlier this week is a positive for the bigger picture demand story. Australia
has agreed to a free trade agreement (FTA) with the United Arab Emirates (UAE),
enhancing access to sheep and goat meat (among other products). From January to
August, the UAE took around 7% of total Australian lamb export volumes, so it
is hoped that this FTA will continue to grow this important market.
The week ahead….
All long-term models now appear to be pointing towards higher chances of above-median rainfall in spring. Even the forecast for the fortnight ahead is looking wet for the south-east of the country. A “wait and see” approach might present in the weeks ahead, as producers hold on hope for some more confidence to come from buyers in Southern NSW, Victoria and South Australia.
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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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Trade winds turn
Mutton has come under pressure in the last four weeks, with unseasonally strong supply the driver. Last week over 170 thousand sheep were processed in the east which is the biggest week of mutton kill since April and over 40k (33%) more than the same week last year. The result? The National Mutton Indicator has dropped 88¢ in four weeks, and 35¢ in the last week alone. Currently sitting at 277¢, mutton is at its lowest point since May. And at a 65% discount to lamb, this a wider than the 50-60% discount we’d expect.
New season lambs are presented with mixed quality in many yards and sold into a weaker market. Wagga’s saleyard report noted “signs of dryness attributed to severe frosts in the region”. Overall, the Eastern States Trade Lamb Indicator fell 26¢ over the week and 34¢ in the west. Heavy lamb prices also lost around 39¢ on the week to average 783¢/kg cwt.
Restocker lamb prices were the one bright spot in NSW and VIC, with both trading within their recent range. In NSW restocker lambs saw a 45¢ improvement week on week, to 742¢, while in VIC they are looking comparatively cheap at 657¢. The divergence in both conditions of new season lambs and restocker demand is clearly reflected in the spread between states.
Although the end-of-week results left more to be desired, news released earlier this week is a positive for the bigger picture demand story. Australia has agreed to a free trade agreement (FTA) with the United Arab Emirates (UAE), enhancing access to sheep and goat meat (among other products). From January to August, the UAE took around 7% of total Australian lamb export volumes, so it is hoped that this FTA will continue to grow this important market.
The week ahead….
All long-term models now appear to be pointing towards higher chances of above-median rainfall in spring. Even the forecast for the fortnight ahead is looking wet for the south-east of the country. A “wait and see” approach might present in the weeks ahead, as producers hold on hope for some more confidence to come from buyers in Southern NSW, Victoria and South Australia.
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Data sources: MLA, BOM, 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.