Divergence between heavy and light lambs
Sheep prices appear to have held firm during the months national price indicators were suspended. The standout trend is the divergence of heavy lamb prices against lighter domestic types.
SALEYARD data for livestock is returning to normal as the nation steps out of coronavirus restrictions, and the standout trend is the divergence of heavy lamb prices against lighter domestic types.
For the first time in at least three winters, farmers are not being rewarded in cents-per-kilogram terms for grain feeding lambs to heavy or extra heavy weights.
It shows up in the latest breakdown of price figures for lambs sold at the major Victorian saleyards monitored by the National Livestock Reporting Service.
The average last week for heavy lambs was 907c/kg carcass weight, which is just 22c/kg better than where the market was a year ago.
In comparison, trade lambs were listed at 938c/kg or 111c/kg better than the same time last June.
When you look at a trend line going back three years, it is the first time heavier lambs have been priced below the lighter weight categories.
And these figures don’t tell the full extent of the distortion between heavy and domestic lambs, as the way the data is collected the heavy lamb price is an average of all the good crossbred lambs sold to slaughter that weigh above 22kg cwt.
If price results for the extra heavy 30kg-plus lambs were isolated out, the gap between these and the genuine tradeweights would be much greater — to the point it is possibly the biggest money difference the industry at the start of winter.
It is possible to show the extent of the price discrepancy by focusing in on one saleyard, such as Wagga Wagga in the Riverina which arguably has the greatest numbers and best runs of prime lambs at this time of year.
Last week at Wagga Wagga the NLRS reported the following prices for the main runs of well finished slaughter lambs which sold to domestic and export processors:
An average of 781c/kg or $274 for extra heavy lambs over 30kg
An average of 857c/kg or $249 for heavy lambs 26-30kg;
An average of 913c/kg or $234 for heavy trades 24-26kg;
An average of 957c/kg or $223 for medium trades 22-24kg. It highlights the price spread of nearly 180c/kg across the weight grades, in favour of the sweet sized domestic lambs. Or to put it another way, there is only $40 per head price difference between a lamb at 25kg sold at Wagga Wagga for $234, compared to a 35kg lamb at $274. It means that extra 10kg of carcass weight is only worth the equivalent of 400c/kg.
So while it might sound impressive to hear of big export lambs making more than $300 at saleyards, in reality for the feed and work that has gone into making an animal that big (and nearly all the $300 plus lambs sold in the past month have been estimated at over 40kg cwt) it isn’t much reward for effort and cost. It can also be argued that these super-sized lambs are out of industry specification anyway, as processor price grids generally discount lambs above 32kg.
Keeping a lid on heavy lamb prices this winter appears to be the market disruption from COVID-19 to food service demand, particularly in Australia’s key export destinations of the US and Japan.
Lamb is a higher-value meat and sales of items like loins and racks are dependent on restaurant demand and sales. The supply make up of lamb yardings is also influencing results, with more lambs above 25kg being offered off feed, with supplies of well finished true domestic lambs (20-24kg) much tighter.
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