Pre-Easter supply glut fails to dampen price

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Author: Matt Dalgleish

Prices for all NLRS reported categories of east coast lamb and sheep have risen from levels recorded in mid-March, despite most measures of supply reaching toward seasonal highs, to see most categories of lamb fetching over 700¢ and mutton holding above 500¢ this week.

Since mid-March lamb throughput across the east coast has been running 18% higher than the pattern set by the five-year trend and sheep yarding levels have been more pronounced, averaging weekly levels 47% above the five-year trend (Figure 1).

A similar picture emerges for East coast lamb slaughter with average weekly levels running nearly 14% higher than the five-year average trend – Figure 2. The higher supply having limited impact upon prices as meat works seemingly happy to soak up the additional supply prior to the Easter period slowdown.

A summary of sale yard price movements highlights the market strength over the past four weeks in the face of the higher supply with all categories registering closing prices this week that are around 70¢ to 100¢ higher than a month ago – Figure 3.

The Eastern States Trade Lamb Indicator (ESTLI) managing a 2% gain on the week to close at 722¢/kg cwt. In the West trade lambs managed to climb also, up nearly 1% on the mid-week price summary from Meat and Livestock Australia, but unable to break above the 700¢ level yet at 679¢/kg cwt.

The week ahead

Reduced sales and a lighter offering is expected as we hit the Easter lull so it’s unlikely to see prices retreat too much in the coming weeks. Although the forecast for rain into the next week is pretty light on and without a clear sign of a decent Autumn break in the south there will be limited opportunities for prices to surge too much higher. 

Author: Angus Brown

After the big spike in lamb prices last week the market steadied. There was plenty of talk about the high prices making things hard for processors, but lamb and sheep slaughter still managed to remain at or above last year’s levels.

Figure 1 shows weekly lamb slaughter starting to follow the 2017 pattern very closely. The fall in slaughter last week was no doubt part of the reason prices rallied so strongly as it was the lowest full week slaughter for the year to date. 

Like last year the tighter supply and higher prices are likely to trigger slowdowns in production, but the way lambs have been killed in April, May and June, there might not even be enough lambs for that.

Despite higher prices, sheep slaughter ramped up last week (Figure 2). This tells us that perhaps there is more money in sheep at the moment for processors. Combined sheep and lamb slaughter is still 5% higher than the same week last year.

The high prices last week drew some more lambs into yards, and this week it was heavy lambs which made the best money. The Eastern States Heavy Lamb Indicator gained 29¢ to hit a record of 735¢, while the ESTLI was up just 5¢ to 715¢/kg cwt (Figure 3).

 In the West, prices eased 10% for both lambs and sheep, to 607 and 398¢/kg cwt respectively. At that price, sheep will start to work their way east, where prices in saleyards this week averaged 517¢/kg cwt.

The week ahead

It looks like the 720-750¢ level is the limit for lamb processors. There were some pens of lambs reportedly making 800¢ this week though, and these were the highly sought after well-finished lambs. There’s not many of them about at the moment. Interestingly, there might be potential for a little more upside for mutton.