Lamb bulk worth the wait?
As saleyard price rates retreat below the benchmark, farmers ask if adding weight is worth the effort?
EXTRA weight hasn’t equated to more dollars for lambs this winter.
And if the trend continues it raises another conundrum for farmers preparing to sell suckers.
Grass is the cheapest feed and there should be plenty around to easily add weight to young lambs this spring.
It has been a discussion point in recent weeks as saleyard price rates have soured and retreated below the benchmark of 800c/kg.
Some agents believe it could encourage farmers to hold on to suckers under the philosophy that more size adds up to more money in the pocket.
While there is always some truth to this thinking, the market has become distorted and heavier-weight lambs have been crunched in recent weeks as the fallout from COVID-19 lockdowns impact export markets.
The graph shows the dollar-per-head average achieved for the three main weight categories of trade and heavy lambs sold at the nation’s biggest weekly prime market, Wagga Wagga in the NSW Riverina.
The data, from the National Livestock Reporting Service, covers the past 12 months and shows how price results have tightened to the point where the financial gain from adding much weight above 26kg looks minimal.
The latest data was for the first week of July and shows a price spread of just $13 a head for lambs weighing from 22kg through to 30kg carcass.
The actual data was:
AN average dollars-per-head price of $186 for 22-24kg cwt lambs;
THE same average of $186 for 24-26kg lambs; and
AN average of $199 for lambs weighing 26-30kg carcass.
As the trend line shows, it is an unusually small price spread, and reflects a couple of issues: the more resilient demand for domestic lambs over exports into countries like the US and Asia; and the shortage of nicely weighted trade lambs after a lot were fed to heavier weights this winter.
To put it in perspective, this time 12 months ago the price difference between a 22-24kg lamb compared with those in the heavier bracket of 26-30kg was $50 a head, or nearly four times the spread of today.
So the question becomes: how much weight to add to lambs before it essentially becomes a pointless exercise?
Nutrien Livestock Bendigo agent Ian Carmichael said it was an issue farmers needed to consider.
“At the moment the industry can’t seem to handle heavy lambs – 28kg carcass seems to be about the cut-off – and people have got to be aware of that,’’ Mr Carmichael said.
Other agents said they had clients who would be prepared to sell suckers as they hit trade specifications, and buy in store lambs to better use spring feed, but the market was so uncertain they didn’t know what price point to be operating in.
There is the argument that lamb prices could find some momentum as exporter plants reopen after winter slowdowns and maintenance, and sucker prices could find support at better rates being offered for old lambs at present.
Part of this confidence comes from an encouraging forward-contract deal that was offered, and quickly filled according to accounts, for sucker lambs for a major supermarket at up to 900c/kg carcass in August.
There are still questions about how many lambs are actually out there to be sold, particularly from parts of NSW that were hit hard by the recent drought.
But equally, it is possible to argue a subdued outlook for lamb based around rising COVID-19 cases in the US (which is a key buyer of heavy lambs), ongoing high infection rates across parts of Asia and continued disruptions to food channels.
And going back to the issue of weight, the industry is shaping up to a spring whereby the majority of young lambs should be fat and in killable condition, potentially putting supply pressure on already fragile demand.
Nutrien Bendigo auctioneer Nick Byrne said the market was facing many variables.
“Is it a glass-half-full time, and when the sucker lamb numbers come, processors will crank back up and demand will be better than we have been seeing,’’ Mr Byrne said.
“Or is it glass half-empty, and how much will processors crank up if they can’t sell it – it looks like being an interesting spring.’’
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