Buyers factor in grass seed discounts

Lamb price differentials of 100c/kg are playing out in areas that are considered hot spots for grass seed. See how the values compare.

Grass seed in lambs has disrupted the processing market, and now it has the potential to flow on and cause problems for store lambs.

Some NSW saleyards that regularly draw stock from areas regarded as hot spots for grass seed contamination have recorded price rates up to 100c/kg lower than southern markets.

It was evident at Dubbo last week where heavy crossbred lambs (24-30kg cwt) were listed at an average 455c/kg cwt by the National Livestock Reporting Service, against rates of 515c to 550c/kg at Ballarat and Bendigo in the same week.

The table on this page shows the average price recorded for heavy lambs sold in the past fortnight at Ballarat versus Griffith, Forbes and Dubbo, and it shows the southern performance has been up to 50c dearer.

In a market under as much pressure as lamb currently is, it can be difficult to isolate causes for price discrepancies. Still, buyers and agents acknowledge seed is playing a part.

Lamb buyer Angus Lloyd, Minerva Foods at Colac, said NSW saleyards had generally taken a hard line of buyer beware and were not negotiating claims after the fall of the hammer, so a risk factor was buying built into northern markets.

“There have been some cheap lambs come out of NSW due to the seed issue,’’ he said.

Elders auctioneer Jason Andrews, Deniliquin in the Riverina, said buyers were more cautious in regions where grass seed problems were more common.

“Seed is more prevalent in the dry pastoral regions, and I do believe 100 per cent that buyers are building in a discount,’’ he said.

But this article isn’t really about the ongoing price impact of seed. If it was, it would delve into the ongoing issue of industry still not getting its act together to put some trading rules in place to deal with grass seed on a fair and consistent basis for both seller and buyer.

Instead the pricing is to show what a significant impact seed has had (and is still having) across the industry and to shed some light on the scale of the problem. Because it will very likely have flow-on effects for store lambs this season.

Like a flood or a fire, if you have been caught up in grass seed claims after selling the stock at saleyards, worn averaging discounts or had stock rejected by processors, it is something you want to avoid happening again.

And therein lies the potential disruption for store lambs. The naivety around grass seed and the production and financial losses it can cause means attitudes will change from a lamb seller and buyer perspective.

While people argue that grass seed in lamb is an age-old problem, this is the first time the industry has seen pushback from processors regarding price discounts and rejection rates. It has hurt more this year because buyers have the upper hand regarding supply and demand.

Agents said NSW breeders in the pastoral country would look at selling volume numbers of Merino and crossbred lambs before seed set this year (which will depend on rainfall and how the season plays out) rather than risk a repeat of grass seed havoc.

“People are certainly not going to get caught with seed again,’’ said Mr Andrews: “Breeders will sell if they see seed coming.’’

Feedback suggests buyers are also going to take the same cautious approach to buying store lambs, particularly out of the north.

Elders Shepparton agent Trevor Downes said the trading environment for lamb was difficult already without adding the risk of downgrades from carcass seed.

“We can’t buy store lambs then three or four months later be hit with seed and lose $2kg,’’ he said.

“We will just have to put a line in the sand, and after seed appears in the north, we will only buy southern lambs unless they can be guaranteed as seed free, and I’m not sure anyone can really do that.’’

The Weekly Times was told similar comments had been made during recent agency livestock meetings, with southern-based branches expressing reservations about purchasing northern lambs once the season turns.

Bendigo agent Alex Collins, McKeen McGregor, there was “absolutely’’ the risk of the store lamb market being disrupted due to the hangover of carcass seed.

“There is certainly going to be some reservation about buying store lambs out of NSW after seed-set, which is usually late September to mid-October – that is potentially going to be cut-off,’’ he said.

The first market segment to be tested will be Merino lambs, with northern agents on the cusp of trying to sell volumes of young sucker wether lambs this August and September.

It could be a tough gig with reports the MK bag lamb market has slowed down again, and farmers are still determining how to value store lambs to fatten at a time when the market has little price direction.