Lamb prices stagger into winter as processors juggle contracts

A winter price spike for lambs looks unlikely with prices fluctuating as the end of May approaches amid a patchy autumn break.

Lamb producers are looking for signs of a winter rally, as processors juggle contracted lamb supplies.

Lamb prices are acting like a rollercoaster, rising and falling on supply and on processor demand, as they juggle saleyard and forward contracted lambs.

The price gains of early last week have mostly been lost in the past five days, squashing hopes the industry may have been at the point of gaining some pre-winter momentum.

A disappointing autumn break in many regions has influenced farmers to sell stock and has also started to deter opportunistic store buyers from purchasing light lambs to feed on.

And now some industry players are tempering producer’s hopes of any significant price spike this winter.

Preliminary slaughter figures show 1.516 million lambs have been processed in the past four weeks, well ahead of the 1.272 million that abattoirs received in the same April-May period last year.

Weight is also influencing the market, with data captured by the National Livestock reporting Service showing the supply of big export lambs is up to four times greater than ideally weighed supermarket style lambs.

Extra heavy lambs have been struggling the most at saleyards after major exporters locked in good volumes direct on forward contracts earlier in the season.

Nutrien livestock agent Ron Rutledge said NSW farmers had been proactive in taking out forward price deals after summer rain gave them the confidence to finish lambs.

TDC Penola director Darren Maney said earlier in the season producers had taken the opportunity to put lambs back into the paddocks with forward contracts.

“The sums worked, you could be confident buying lambs and the margin looked good, whereas people were worried about buying cattle and getting a return at the other end,” he said.

But a lack of a good autumn break in the Upper South East of South Australia — a major area for finishing lambs — was now limiting buyer appetite.

However, Mr Maney said he did not think processors would be able to pay much more than 800c/kg coming into winter.

AuctionsPlus analyst Tim McRae said while the sheep flock was historically very low now, it was likely to rebuild fast, as it had after dry periods, particularly in NSW, after 2017 and 2012.

“And when it did that, prices did come back, but they did not come back significantly; demand was and is robust, so this time around I don’t think we will see any major demand issues towards the end of this year either,” he said.

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