Producers keep selling despite decade low prices

Winter premiums for lambs have failed to materialise, yet producers keep selling.

Producers continue to sell lambs at decade-low prices as they juggle animals cutting teeth and the start of sucker numbers.

And any lift in rates one week is flushing out even more lambs the next, with saleyard offerings bouncing weekly as producers try to capitalise on better prices.

Last week, southern Australia’s biggest prime sheep market, Wagga Wagga, yarded 45,000 lambs in a total offering of 61,000 on the back of price rises at other sales.

Meat and Livestock Australia market information analyst Jenny Lim said lamb and sheep numbers were up 18 per cent last week with significant boosts in offerings, particularly for Merino lambs.

She said the return of some supermarket and processor buyers after shutdown periods helped support demand, but not all categories of lamb were benefiting.

“As weight and finish drive the current market, the light lamb indicator is more impacted than the heavy or trade lamb indicators,” Ms Lim said.

While demand and yardings are lifting, winter premiums have not materialised, and the surge of numbers has pushed prices to the lowest levels seen for years.

Figures from Meat and Livestock Australia show the national trade lamb indicator closed on Monday at 510c/kg, 16c/kg lower compared to the same week a decade ago and not much better than prices paid in 2003.

The national heavy lamb indicator started this week at 505c/kg, lower than 2013 rates and sliding more than 50c/kg in the past month.

Victorian Farmers Federation livestock group president and lamb producer Scott Young said lamb prices were “frustrating for producers”.

He said it was disappointing that lower prices for producers were not being passed on to the retail price of meat.

“Everyone needs to make a margin, and we understand that, but when producers are not even making the cost of production and everyone else makes a good margin, then it’s frustrating.”

Mr Young said there would be flow-on effects from the low winter rates this year, including the reluctance of finishers to buy restocking lambs for next year.

“That will make prices interesting in spring as those restockers usually put a floor in the market, so it is difficult to say what might happen,” he said.

Mercardo analyst Olivia Agar said winter was typically a time of low slaughter given that abattoirs used this time for plant maintenance.

“Last year, we saw the tail end of old lamb supply dry up around now, with a few weeks’ relief before early new season supply started trickling in,” Ms Agar said.

“There should be some price support in August if the same trend occurs.”