Insight: Winter price meltdown hits lambs

Producers withdrawing lambs from saleyards has only acted as a band-aid to one of the harshest winter price meltdowns the industry has witnessed outside of a drought event.

Producers withdrawing lambs from saleyards this week has only acted as a band-aid to one of the harshest winter price meltdowns the industry has witnessed outside of a drought event.

Numbers were cut at major selling centres on Monday as producers holding old-season lambs tried to avoid selling into a market that collapsed by another 50-100c/kg carcass weight last week.

Just 5400 lambs were offered at Bendigo on Monday in one of the smallest yardings recorded at the centre in recent years, while numbers were slashed by around half at both Corowa and Dubbo in NSW.

On Tuesday Forbes agents offered 13,000 lambs after last week’s yarding of 30,000 was hit with “shock” discounting.

“Some lamb prices got jerked back by $50 which was a shock to everyone and something I’ve never seen in 26 years as an agent,’’ KMWL director Luke Whitty from Forbes, NSW, said.

“It’s just a lack of kill space; there is nowhere to go that is not already booked-up,” Mr Whitty said.

Buyers said ongoing Covid-19 disruptions rolling into a big carry-over of lambs from last spring was the culprit for falling prices.

“This slump in lamb price is due to a slump in kill space not foot and mouth disease (threat),” Elders Deniliquin agent Jason Andrews said.

The price disparity between Victoria and NSW for lambs in the past week was evidence of how supply is overwhelming processing capacity, a flow on from northern grazing areas buying big numbers of store lambs to finish for the autumn and winter markets.

There is 50c/kg difference between the state price indicators for lamb, with the latest figures from Meat and Livestock Australia listing trade lambs in Victoria at an average of 672c/kg carcass weight compared to 623c/kg in NSW.

MLA market information analyst Jenny Lim said processors have been more cautious in the market lately.

“Many processors use saleyards to fill the gaps in forward contracts that have already been made in 2021,” Ms Lim said

“Some processors are also going through their yearly winter maintenance shutdowns, which take them offline.”

Trade lambs lifted $8 at Dubbo on Monday as the market improved off a low base but prices were down $5-$20 at Bendigo and Corowa.

The backlog of old-season lambs is expected to keep pressuring the market this month, potentially causing a headache as sucker lambs start appearing at saleyards, potentially from mid-August in Deniliquin.

The eastern states trade lamb indicator closed on Monday at 639c/kg, down 54c/kg on last week, while the heavy lamb indicator dropped 61c/kg to 660c/kg.