Lamb market upswing as quality gains ground

Lamb market upswing as quality gains ground

Sales
Emma and Murray Rees, Tomingley, sold sucker lambs at Dubbo for $180 and are with agents Jason Hartin, Narromine, and Mark Garland, Dubbo. Photo by Rebecca Sharpe.

Emma and Murray Rees, Tomingley, sold sucker lambs at Dubbo for $180 and are with agents Jason Hartin, Narromine, and Mark Garland, Dubbo. Photo by Rebecca Sharpe.

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Lamb values have surged higher in the past fortnight with some suckers hitting price peaks not seen before at this time of year.

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LAMB values have surged higher in the past fortnight with some suckers hitting price peaks not seen before at this time of year.

In the past week the NSW trade lamb indicator has recovered more than 10 cents a kilogram (carcase weight), with much of the lift coming from central and southern selling centres. At an average of 823c/kg, the indicator sits well above this time last year and about 40c/kg dearer than the current Victorian market.

Demand for light lambs was also on the rise - they averaged 796c/kg at the end of last week which was 24c/kg dearer than the week before.

Meanwhile, restocker lambs were about the 880c/kg mark, which was more than 200c/kg higher than this time last year.

Agents in the south and Central West have reported the quality of the new season lambs offered in the past week has been excellent.

Forbes Livestock and Agency Company director Tim Mackay said store lamb prices were the highest he'd ever seen for this time of year.

"I expect the supply will get tighter later on, but right now the lambs at Forbes have been making great money and that's enticing some people to sell their lighter lambs rather than hang onto them if they are short on feed," Mr Mackay said.

Forbes Livestock and Agency Company agents Randal Grayson, Jack Rix and Tim Mackay selling lambs at the Forbes prime lamb sale on Tuesday. Photo by Rachael Webb

Forbes Livestock and Agency Company agents Randal Grayson, Jack Rix and Tim Mackay selling lambs at the Forbes prime lamb sale on Tuesday. Photo by Rachael Webb

Hartin Schute Bell director Jason Hartin, Narromine, said the quality of the lambs offered at Dubbo on Monday was a credit to the vendors.

"The season's dry and people are coping with limited water and feed, but they're still turning off excellent runs of lambs," he said.

He said the prices were holding up very well and expected the market to remain solid heading into summer.

"Due to the season we may see some graziers turn off lambs lighter than normal, and bought by southern lot feeders for finishing," he said. "That may mean as the season goes on, the supply of the heavier suckers is limited in this area."

Wagga Regional Livestock P/L director Isaac Hill said depleted supplies of sucker lambs in the north may help boost an already full complement of buyers in the south of the state later this year as they chase supply.

"In this district many people try to turn off 60 to 80 per cent of their lambs before Christmas," he said.

"There may end up being some urgency with some lamb producers to finish their lambs if the depth of feed starts to run out. Some of the crops are sitting on a knife's edge at the moment, so we may see some people looking to buy in lambs to graze those crops."

Either way, Mr Hill said the market in the south would remain solid with plenty of demand for both restocker lambs and those with a bit of weight and finish on them.

Is there room for a price lift?

Lamb supply into spring and summer may be tighter than normal as the drought continues to bite.

Rabobank animal protein senior analyst Angus Gidley-Baird said historically lamb prices continue to fall through September and October as increased new season lamb supply hits the market.

"However, with poor feed conditions, finished lambs will take longer to reach marketable weights, slowing any flow of finished lamb volumes and helping to support prices," Mr Gidley-Baird said.

He said lamb slaughter figures for August and early September in Victoria and South Australia were also some of the lowest in the past five years, while in contrast the NSW slip was not as severe.

At the same time, total lamb exports show signs of contracting into some key markets, even though the volumes to China remain strong.

Meat and Livestock Australia conceded in its September Australian Sheep Industry Projections Update that overall the 2019 lamb export volumes would finish the year at 268,000 tonnes (shipped weight) which was back one per cent year-on-year.

Mr Gidley-Baird said average US lamb import prices had remained relatively flat in the first six months of 2019 which meant price spreads from June to August (US import to Australian domestic lamb prices) fell to some of the lowest levels in more than five years.

"The fall in Australian prices in August does help the spread, but provides little room for upside price movement until US import prices rise," he said.

Exports are only limited by supply

Lamb slaughter reached the lowest level since January 2012 in June and remained subdued in July according to National Livestock Reporting Service figures. However, NLRS reported figures indicate new season lambs are starting to appear in reasonable numbers.

As a result, forecast 2019 national lamb slaughter has been revised slightly higher by Meat and Livestock Australia in its most recent Sheep Industry Projections and was now expected to decline five per cent on 2018, to 21.6 million head.

For the 2019 year-to-August, Australian sheepmeat exports grew 2pc year-on-year, reaching 187,000 tonnes (shipped weight).

However, MLA predicts export volumes will follow lamb slaughter and slow over the final months of the year relative to 2018.

As such, 2019 lamb exports were expected to finish the year at 268,000t which was back 1pc year-on-year.

MLA have also reported the average export unit value hit new highs across lamb at 890c/kg, up 11pc on this time last year.

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