Lamb weight plays pivotal role in price differential
Halving of supply has put a premium on light trade lambs but it’s the reverse for larger export lambs whose numbers have doubled.
There is a clear alignment between lamb price and lamb weight at saleyards this winter. And the driver of it all is supply.
The reason sweet little trade lambs have bounced back over 900c/kg carcass weight at auctions in the past week is because numbers, in relation to past seasons, are down at least 50 per cent.
Conversely, the reason why big export lambs have been unable to climb much above 780c/kg is because their numbers have more than doubled on the supply rates of the past five years.
It is not often that market trends can be so easily explained, but the latest supply data from the National Livestock Reporting Service tells quite a dramatic story about why different price points have emerged for lambs this winter based around weight.
The graphic shows the supply of lambs by weight for the month of June, as captured by NLRS market reporters at the major saleyards across the eastern states.
The result to focus on is the export lambs above 30kg, and at the other end of the scale, lambs in the 18-20kg and 20-22kg weight categories.
In the past five weeks more than 84,000 super-sized lambs (30kg to over 40kg at times) have been assessed by the NLRS, nearly 30,000 more than the same period 12-months ago — and double to quadruple the supplies that existed five and six years ago.
At the same time, the number of light trade lambs has fallen away by half to a third on the levels of past years.
The big picture behind the trend is improving genetics and better feeding regimens that have enabled farmers to produce bigger lambs.
But to drill down into the current season, agents and buyers argue the increased turn-off of heavy export lambs goes back to expensive store lambs and farmers forced to add kilos to create a dollar-a-head trading margin.
The change in seasonal conditions, and many properties still being understocked due to the recent drought period, has also fed into increased lamb weights this winter.
Nicely sized trade lambs are now making considerable price premiums over heavier weighted lambs.
At Bendigo on Monday this week the top price of $279 was for a pen of outstanding extra heavy lambs that were judged to be at least 38kg, some buyers arguing 40kg-plus. Allowing for a skin value that put them in the low 700c/kg range.
Further into the sale there was neat trade lambs, 22-24kg, making over $230 to average in excess of 900c/kg.
A lot of this detail gets lost in the official saleyard price indicators which are simply divided into trade lambs and heavy lambs (everything 22kg-plus).
On Monday those indicators were listed at 867c/kg for trade lambs and 847c/kg for heavy lambs. To be in the premium price range of 900c/kg-plus, lambs need to be well-bred with shape, in shorter skins and generally below 24kg.
The current price rise has hit quickly and quite late — traditionally the market has a much better autumn run if it is going to hit big money like it has in the past week.
The question it raises is how long the window of opportunity could exist for producers to capture a piece of the 900c/kg-plus money being paid for neat trade lambs.
A determining factor will be the flow of new-season sucker lambs, and how quickly they move into saleyards.
The first drops of sucker lambs have started in NSW, led by the Forbes saleyards which yarded around 1000 last week.
The majority sold in a tight price range of $205 to $226, costing processors an estimated 910c/kg to 930c/kg.
This week selling agents had drawn for 1825 sucker lambs at Forbes in NSW, showing how the strong prices could increase the pace of young lambs into markets, the thinking being sell now at 21-23kg rather than keep to add weight and risk the market easing (which it always does into the spring).
Agent Kevin Miller, from KMWL at Forbes, however, said it would be a controlled sell of suckers with farmers in the area having the luxury of plentiful feed at this stage.
“We won’t see a rush of numbers, but they will build over time and once we are into September they will be pushing them out the gate,’’ Mr Miller said.
Judged on past years, sucker numbers don’t really start to build until mid-August, which gives producers a window of the next six weeks to possibly catch the market at its peak before supply dynamics change.
But the market is fluid, and as the past week has shown, the market can change rapidly and rates of 900c/kg-plus have not been sustained for long in past seasons. Such big money is the result of supply shortages rather than increased demand.
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