AuctionsPlus activity, lambs slaughtered numbers leave room for worry

A dip in the number of lambs slaughtered and a considerable jump in activity on AuctionsPlus should have plenty paying close attention.

Fewer lambs slaughtered so far this season, and a big jump in trading activity for little store lambs on AuctionsPlus in the past three months — these are the facts that can’t be disputed by hard data.

What it means for lamb supply and prices going forward is open to debate, but if you are a producer (or more particularly a trader) the combination of a slow slaughter and more lambs potentially being carried over in paddocks should at least raise an eyebrow.

Firstly, to store lamb trading.

As a market reporter covering prime sales regularly, the lack of light sucker lambs in the saleyard system this spring has been quite noticeable.

Bendigo is a case in point, with saleyard throughput down nearly 40,000 head since August compared to year ago levels. Much of the drop in numbers occurred during October when there were just 72,611 lambs yarded, against 105,844 in the same month last year, according to figures from the Bendigo Livestock Exchange.

Light sucker lambs have been noticeably fewer at store sales. Picture: Chloe Smith

An investigation by The Weekly Times into where these lambs were being sold confirmed a staggering shift to online trading.

In the three-month period of August, September and October there were 325,133 crossbred store lambs sold on AuctionsPlus, up 86 per cent or an extra 150,327 head on the same time 12-months ago.

Trading of Merino lambs was also higher online, but only slightly at 276,168 head or 6 per cent more.

The actual figures, supplied by AuctionsPlus, are detailed in the graphic on this page, broken down by month and also by the weight of lambs sold.

The number of small store lambs traded early this season is worth noting.

AuctionsPlus reported sales of 68,655 crossbred lambs listed at less than 35kg liveweight, more than triple the number traded across August, September and October last year.

The same trend is also evident in the Merino section, with lighter lamb sales up significantly.

Some livestock buyers suggested the sell-off of immature lambs is a reason why slaughter lamb prices were able to hang-on this spring, the market only suffering big falls in the past 10-days when usually a hit would happen in September or early October.

“These figures show more early drop lambs going out as stores rather than being carried on as spring-drop suckers, which explains why the spike in prices this year was able to carry on for so long,” one meat buyer who looked at the AuctionsPlus data said.

Zoom sales next? AuctionsPlus has been the preffered sale spot for many recently. Picture: Chloe Smith

Which leads into production level. As the graph on this page shows, the national lamb slaughter this spring is tracking below last year and significantly behind 2019 although it was a season distorted by drought.

So far this season (using August as the start of the run of the sucker lamb run) the lamb kill hasn’t been able to get much above 360,000 head on a weekly basis.

As an example, in the week ending October 22, there were 334,036 lambs processed, according to data from Meat and Livestock Australia. In the same week last year there were 371,983 lambs slaughtered.

Start adding up these weekly production declines of 20,000 to 30,000 lambs a week and it quickly accumulates into decent figures, perhaps worrying figures if you agree there is more lambs on farms this season due to more ewes being joined and bigger lambing percentages achieved.

The bottom line is, all the industry figures on this page support the argument that there is a greater carry-over of lambs happening compared to a year ago.

As part of this article, The Weekly Times asked agents and buyers about this possible scenario.

Many suggested the summer months of late January and February could be pressure points, exaggerated by the likelihood of the southern flush of lambs (out of Hamilton for example) running a few weeks later than usual after a slow start to weight gain and finish.

Picture: Chloe Smith

Then there was the strong take-up of forward contracts for export lambs, which means some companies will now only have a limited presence in the auction system as stock roll in direct.

And feedback from those forward deals was kill space in January and February was the quickest to fill, which ties into small lambs going out in August-September and having six months to grow out for a turn-off in the New Year.

However in this current environment markets being disrupted by Covid-19 and not following traditional supply and demand price patterns, it is more difficult than ever to interpret data. And on a positive, demand for lamb in markets around the world appears robust.

Elders agent Kevin Thompson from Wycheproof said the shift to online selling was perhaps just highlighting store trading numbers that were once masked by private sales and the AuctionsPlus figures mightn’t be as dramatic as they appear.

“Maybe those store lambs were always there but were just marketed through different avenues,” he said.

Another point raised was the slowdown in the Middle East (MK or bag lamb) trade, which means more lighter lambs are remaining in the system for longer.

All of this is why The Weekly Times has detailed the raw data for farmers to come up with their own conclusions.

Price wise the AuctionsPlus figures do show more money than ever is being invested in store lambs. The figures, on the graphic, show an average per head spend of $20 to $30 more on light lambs compared to 12-months ago.

Combine this with higher grain prices which will add an extra $20 or so to feed rations, and the cost of finishing a lamb has risen by a ballpark $50. Although with the good rainfall many producers would be hopeful of finishing stock on cheaper grass.

Overall, the combination of higher store lamb costs, bigger numbers of little lambs being traded and lower than usual slaughter figures all paints a cautionary tale going forward.