Market fears from the west are affecting sheep markets

West Australian sheep producers are facing prices as low as $1, as the ramifications of the looming live sheep export banstart to hit the national flock.

Australia’s eastern states will lose a valuable source of sheep supply as the long-term ramifications of the looming live sheep export ban start to hit the national flock.

West Australian producers are facing prices as low as $1 and have reportedly started shooting stock, amid a tough season and ongoing uncertainty over the ban – with eastern states seemingly unable to soak up the significant turn-off.

But, with industry projections indicating West Australian farmers are already turning away from sheep, others warn the consequences will be felt by the rest of the nation.

Victorian Farmers Federation livestock group president Scott Young said the flow-on effect for lamb and wool would be felt “for a long, long time”, and that the east needed a vibrant West Australian industry.

“When we came out of drought last, we needed sheep from WA to restock and if that is not a strong sheep state, then that will push up prices for replacements for us,” Mr Young said.

The federal government has been sitting on its review into phasing out live sheep exports for six months. Industry says the report should be released, arguing the ongoing certainty is leading to the massive price falls and higher turn-off.

The historically strong sheep-producing state has already seen its share of the flock decline to about 12.4 per cent in recent years, dropping it from third to fourth place.

It’s believed about 500,000 sheep and lambs have made the big trip from Western Australia to the east since the start of the year – down 1 per cent on last year, yet still keeping a ceiling on prices paid in eastern states.

The West Australian mutton indicator closed on Monday at 71c/kg carcass weight, compared to 237c/kg in Victoria.

At sales last week, sheep sold as cheaply as $1 with about 600 Merino ewes in the 14-18kg carcass weight range at one sale making $1-$20 to average just $11.

West Australian prices are expected to fall even more when the live export moratorium, which stops live exports during the northern hemisphere summer, kicks in on May 1.

WA Agricultural Minister Jackie Jarvis is understood to have this week called on the federal government to delay the moratorium by 10 days, to allow more sheep to be exported and take pressure off WA markets.

Mr Young said the high cost of feed in Western Australia, with hay selling for about $500 a tonne at the moment, meant some producers there faced tough choices.

“The problem with WA sheep and lamb prices at the moment is there are no producers who want to buy, so the processors don’t have any competition (leading to price falls), and light stock are unsaleable,” he said.

“The best we can all hope for is rain in WA, which could tighten up the sell off and create more positivity for the industry there.”

WA Farmers president John Hassall said a short spring last year, and no early rain, meant producers were faced with a lack of feed, and no incentive to pay high prices to feed stock that could be worthless.

“Some producers have no fodder, no water and can’t turn livestock off because processors have long waiting lists, but don’t want to feed them,” Mr Hassall said.

“They are absolutely caught.”

He said some producers were shooting stock on farm and “personally knew one good farmer” who had shot 500 that would have little if any commercial value.

Auctioneer James Wilson from Nutrien Bendigo takes the bids. Picture: Zoe Phillips

Mr Hassall said releasing the report on live exports, whatever the findings, would give the industry certainty.

“There would be 30 per cent of sheep producers here who would not have mated their flocks this year,” Mr Hassall said.

“This (live export) report has been sitting there for six months – if it comes out and says we can’t export in August, we will deal with that but at least we know what we are dealing with.”

Agriculture Minister Murray Watt has maintained the trade will not end in this term of government, and previously attributed the current market conditions to oversupply.

McKean McGregor livestock manager Alex Collins from Bendigo said he could buy “as many sheep as he wants” from Western Australia at the moment, yet could also access enough stock from eastern states.

This, he said, with a freight cost of $42-$43 to transport sheep about 3000km from Western Australia, meant he had not bought many in the past six weeks.

“If I can, say, get Dorper lambs over here (eastern states) for $65-$70, then that means I can only pay about $28 in WA when you add on the cost of transport,” Mr Collins said.

Mecardo analyst Olivia Agar said there was a bottleneck in the supply chain for West Australian producers sending lambs to slaughter, caused by both the seasonal conditions and uncertainty over the future of the live export market.

However she said nationally, there were record volumes of lambs being slaughtered from the rebuilt national flock, meaning eastern states were not looking for stock.

And confidence was waning.

“Both lamb and sheep offtake are used as an indicator of whether the flock is declining or growing,” Ms Agar said.

“The western lamb offtake is at record levels, indicating young sheep numbers are being reduced.”

It was now sitting at 25 per cent, the highest level recorded within Mecardo’s data set that reaches back into the 1980s, she said.