Replacement ewe values set to fall

Early ewe sales are a market test to see how much money restockers are prepared to pay for replacements, and the signs aren’t good.

The disastrously low mutton price will play out on the replacement ewe market this spring by dragging restocking values to levels not seen for years.

The saleyard mutton indicator started the week at 128 cents per kilogram carcass weight. A look back at data kept by Meat and Livestock Australia shows this is now below the level of a decade ago when mutton was at 136c in the spring of 2012.

The rule of thumb, which has played out reasonably accurately at the big Hay Merino ewe sale in the Riverina in September, is the young ewe price will be roughly double what mutton is making.

NSW agent Geoff McDougall, Nutrien, said the rule was generally a reasonable guide to young ewe values and was how he had prepared vendors for the price reality at this week’s opening Riverina sale at Hillston.

The graphic on this page shows the average price achieved for young Merino ewes sold in the Elders run at the annual Hay sale. The feature sale sets the tone for all the other big spring yardings that follow, and it is now only 10 days away (on Friday, September 22).

In 2022, the average young ewe price at Hay was $282, and a year ago, mutton was at 506c or the equivalent of $142 for a 28kg cwt sheep. The rule works: $142 x 2 = $284.

In 2021, the average ewe price was a record $322, and mutton was at 624c or $175 – double that, and it amounts to $350 to be not far off.

In 2020, the average ewe price was $297; mutton was at 516c or $145; again, the 2 x mutton value is fairly accurate.

The rule got distorted in the drought year of 2019 when Merino ewes at Hay averaged $242, and mutton was at 540c or $151, which, if the double rate had been in play, should have put ewes closer to $300.

This year will also be distorted as the industry has no confidence and direction and a mutton market that has shed a decade of gains in weeks.

A heavy cull ewe is only worth $40 to $50 on current values. This means young ewes, unless they are in the top echelons of a sale and attracting repeat buyers, are struggling to make more than $100 per head.

Such price reality is playing out on AuctionsPlus, where 2541 Merino ewe hoggets averaged $95 last week, and 3896 young first-cross ewes averaged $116.

For those committed to sheep and lamb production, the buying opportunities are immense, or as Mr McDougall said, “there has never been a better chance to buy young ewes’’.

Eventually, the wheel of fortune will have to turn for sheep as the drastic price cuts this year will cause a reset across the industry. Farmers in mixed farming areas capable of ramping up cropping programs are intent on scaling back or dumping sheep altogether, according to multiple agents the Weekly Times has spoken to.

Source: Included

The amount of ill-will and discontent about how lamb and mutton prices have been slashed is palpable, to the point that many farmers have lost interest in even looking at the figures and buying opportunities.

NSW agent Mark Flagg, Barellan, said: “I’ve never felt so much that people just don’t want to buy sheep at the moment, and while the mixed operations might not grow any more crop, they might just move out of sheep.’’

Mr Flagg said change within the industry was already showing up at sales, including at Hillston on Monday: “There was not the usual mix of buyers there today.’’

One pen of young Merino ewes sold for $200 at Hillston in a stronger-than-expected result, although it quickly wound back, and sales above $150 were limited.

Results from Hillston show the ewe market this spring is going to follow in the footsteps of the cattle industry, with lighter animals the toughest to sell.

Merino ewes under about 52kg liveweight and not at ideal joinable weight struggled at Hillston and quickly went below $120.

What does it mean for the big Hay ewe sale next week? There have been years when Hillston has claimed the top Merino price for the season, and this coming bout of early spring hot weather is going to scare the pants off a lot of people.

Some predict if repeat buyers clash on some name lines, $200 to $240 could be possible on a few pens at Hay, but equally, some suggest the weather could drag it back under $180 as more confidence is lost.

The bottom line is that very good quality ewes will be cheap, to the point some vendors at Hay are considering their options, and numbers might be reduced by breeders opting to retain more 1.5-year-olds.

If you can see through the discontent of current returns for mutton and lamb and have enough feed as a buffer against the dry, these spring sheep sales will represent value not seen for years.