Figuring out what ails ewe rates
The average price for young Merino ewes has been trending downwards this autumn compared with previous seasons. Are there underlying factors or is it a case of hit and miss?
STORE sheep prices have had a tremendous run, but that doesn’t mean it has been greatly profitable for everyone who staked their hopes on the flock rebuild and ongoing record demand for breeding ewes.
And to take it a step further, maybe there is a lesson in the following data that can be related to the cattle market and how when prices reach very high levels it doesn’t take much to go wrong — or not even really “wrong” — for margins to be shaved.
The table shows the average price for Merino ewes sold on AuctionsPlus in the past three years, analysed by season.
It is a fascinating set of figures, and thanks to Tim McRae at AuctionsPlus for crunching the detailed numbers.
It was inspired by comments made at recent sales by some agents about how there has been “no joy in the job’’ for farmers who had invested in Merino ewes during the spring to join and sell as scanned-in-lamb this autumn.
In a couple of cases The Weekly Times was told of trades that involved ewes trucked from Western Australia, joined to meat rams, and then sold for a margin of as little as a few dollars.
The AuctionsPlus data confirms how trading conditions have been tough for those who punted on buyer demand for breeding stock.
In the spring months last year the average price for a young Merino sold online was $238 per head. So far this autumn the average price for a SIL young Merino ewe is $268.
The $30 difference doesn’t stretch far taking into account the cost of a decent joining ram (meat rams averaged over $1000 per head this past stud season), transport costs, scanning costs, selling fees, animal health treatments, a few deaths and the fact not all ewes would get in lamb.
Price figures for older Merino ewes are only marginally better. The price average for grown Merino ewes in spring 2020 was $198 per head, with the price point for SIL grown ewes currently at $247.
And for those farmers who have gone with just station mating (joining but not scanning ewes to show which are pregnant) the figures are even tighter. So far this autumn the average price for these joined ewes is tracking between $210 and $217 per head.
It is a far cry from a year ago when young Merino ewes went from an average of $187 in the spring of 2019 to a record average of $305 for SIL the following autumn. On paper it was a gross margin of $118 or nearly four times greater than what the current figures suggest.
So what has gone awry this season?
A few theories were put forward, including:
STORE sheep prices probably got overheated in the spring when feed was booming and demand to restock big swathes of NSW was at its peak;
TIGHTER feed conditions this autumn has then dulled demand for breeding ewes;
GOING forward with the better season likely to result in more lambs this spring onwards which could pressure lamb and mutton values, producers can’t see the return in ewes costing $300.
GOOD paddock moisture and better availability of irrigation water has some farmers more intent on cropping over expensive livestock this year.
Agent Jason Andrews, Elders Deniliquin, said there was no obvious answer as to why the SIL ewe trade hadn’t lived up to expectations this year.
“You couldn’t say anything went dramatically wrong,’’ he said: “The market has just been hit and miss with no real rhyme or reason to it.
“If you sit down and do the sums there certainly hasn’t been a lot (of profit) in it.’’ Last week’s price results for SIL ewes listed online remained tough, with the price disparity between what vendors wanted or expected for ewes not aligning with what buyers were willing to pay.
Clearance rates for SIL Merino ewes dropped to just 40pc on AuctionsPlus in a softer market that averaged $255 per head. SIL crossbred ewe prices fell by $30 to an average of $300 and also posted a low clearance rate of 49pc.
It now remains to be seen whether the big rain event can put some momentum back into the market and lift prices closer to what vendors find acceptable.
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