Records vs restocking: What’s the cost of high prices?

Amid a flurry of record ewe and lamb prices, what might be next for producers who are battling to replenish their feed stocks?

Estimates show young ewes could make more than $500 this spring.

In September 2021 the media carried headlines of record breaking Merino ewes to $512 at Hay, NSW, in the same week as prime lambs hit a then national record of $340 at the Wagga Wagga market.

The point: the industry now has multiple records above $400 a head for heavy export lambs and carcass rates at never before seen levels of $10/kg and $11/kg for slaughter lambs. The mutton indicator is also tracking at close to all time highs with heavy ewes regularly over $250 and above $300 on occasion.

The question: what could the top young Merino and crossbred ewes make this spring? And as a producer coming off one of the most difficult and expensive seasons to run what livestock would you be prepared to restock at big cost?

On paper at least there is an argument for young ewes to make in excess of $500 this spring, based on the old trading rule of one lamb and a cull ewe setting the value of a replacement breeder.

Action from the Corowa sheep sale.

But is that the reality, taking into account the very erratic price run of red meat markets in the past three years, and the confidence and financial hits people have taken from the extreme swings as well as the seasonal issues.

Attention is starting to turn to store stock values after more rain cemented the promise of at least a base level of spring feed, and after livestock numbers started to drop away at saleyards in the past week.

There was a dearer trend for store cattle at Wodonga last Thursday as numbers dropped below 1500 head, well down on the 3500 to 6500 cattle the centre had been yarding through the autumn.

Schubert Boers livestock agent Craig Schubert, Wodonga, said the market was potentially starting to shift from an over-supply to an under-supply of cattle.

“Everything had a dearer trend – there was little black steers consistently making near or over 500c/kg liveweight and we haven’t seen that for awhile,” Mr Schubert said.

“Numbers are obviously going to have a big bearing on the market going forward.”

As saleyards start releasing their financial year figures, the early drawn down of cattle is being put into focus.

Figures from the Mortlake and Wodonga saleyards show an average increase of 25 per cent in the number of store cattle sold this past financial year to the July to June period in 2023-2024.

The required re-build of numbers in the south is viewed as being a key component of how strong livestock prices could get.

But agents suggested there was some caveats to how this demand could play out.

“People need to get feed back around them, restocking is not even really on the radar yet,” Craig Pertzel, Kerr and Co at Hamilton said.

The feed component was also raised by Yea livestock agent Bruce Elliott, who said it was likely hay and silage production would take priority over replacing stock numbers, which could delay the strongest store demand to later in the year (providing the season does continue to improve to create fodder opportunities).

“People need to build up a bank of feed again – there’s producers who thought they had two years of silage stored and it has all gone in six months,” Mr Elliott said.

“Hay sheds have to be filled first before most people will go out and buy a lot of cattle as they won’t want to be in a position where they can’t feed them again.”

Being a traditional breeding area, Mr Elliott said it was likely many herds would be naturally rebuilt from retaining more heifers rather than purchasing in extra breeding numbers.

“In this area (around Yea) we have been fortunate in that we haven’t had to dig into the cow herd too much.”

And in Western District herds Mr Pertzel said retaining more heifers would be the preference for many.

“This is a bulk breeding area and restocking will be done naturally where possible by retaining heifers – if and when the feed arrives.”

The outlook for sheep and breeding ewe demand and numbers is even more complex, particularly if viewed alongside some of the data in the latest Sheep Producers Intention survey just released by Meat and Livestock Australia.

The sheep flock is in decline and 41 per cent of respondents in the survey indicated they would be reducing their breeding ewe numbers – but this is influenced by Western Australia where the industry has been distorted by the live sheep export ban and in South Australia by extreme seasonal conditions.

The interesting trend in the report was the much higher confidence in sheepmeat compared to wool, and this could have major ramifications for the industry moving forward as Merinos are switched out for other breeds.

In Victoria now the flock break-up on breed is 57 per cent meat or dual purpose ewes compared to 43 per cent Merino. With fewer specialist first-cross ewes being bred – and many first-cross ewe lambs sold for slaughter in recent months – sustaining the meat breeding flock becomes problematic.

Agents have suggested more farmers could retain more ewe lambs to breed from this year, particularly if young ewe prices go to extreme levels to match the $400-plus and $250-plus some farmers (not all) have been receiving for lambs and mutton.