Saleyard prices fall $10 to $30

Lamb prices are under stress after falling $10 to $30. Here’s what you need to know from our livestock expert.

The lamb market is under stress. This fact can’t be denied, with saleyard prices for prime slaughter lambs falling by $10 to $30 in the past week.

The national price indicator for trade lambs slipped below the benchmark rate of 700c/kg carcass weight late last week – the first time this has happened in more than a year, according to figures from the National Livestock Reporting Service.

But finding hard data that logically explains what is happening to the market is more difficult.

The easy rationale for the lamb market problems, as it steps into autumn, is a backlog of delayed numbers from the troublesome wet spring, tightening feed availability this March with dryland lucerne and summer crops running out after a hot and dry spell, and weaker export and domestic demand for lamb amid the cost of living challenges facing consumers.

Lamb supply is the intriguing one of the above factors.

This week, Meat and Livestock Australia and Australian Wool Innovation released the latest Sheep Producers Intention Survey.

The survey asks sheep farmers from around Australia a series of questions regarding the stock they are carrying, lambing percentages, lamb turnoff etc.

The key finding is that producers sold a lot less lambs from October to December than they had forecast, and these lambs will now be sold in the first half of 2023.

The figures are alarming.

Back in October, the survey results showed: farmers had already sold 2.93 million lambs for the season and would sell another 8.91 million head up to Christmas.

It added up to 11.84 million lambs, leaving 10.17 million lambs carried over and marketed in 2023 (January to June).

After farmers were surveyed this February: just 8.75 million lambs were sold before Christmas, meaning the carry-over of lambs had jumped to a forecast 13.44 million still be sold from January to June.

The headline grab from the survey was 51 per cent of farmers hadn’t managed to sell the number of lambs they hoped from September to December. The number one reason was the weather, followed by lamb prices ‘not being good enough at the time’.

An extra 3.27 million lambs being carried over is a ‘holy #%*!’ scenario. It suggests the market could come under immense supply pressure, and the current $10 to $30 price falls could be the tip of the iceberg.

But if farmers had carried over an extra three million lambs, indeed, it would show up in the national lamb kill. Yet, strangely, it doesn’t seem to.

From September to the end of February. According to data published by MLA, 8,435,242 lambs have been processed. From September 2021 to February 2022, there were 7,718,612.

It means year-on-year, the lamb kill is up around 9.5 per cent. Comparing this to the original MLA forecast of around a 9 per cent increase in the lamb kill this year, it would mean production is current, throwing doubt on a huge backlog of lambs.

Anyone who reads this column regularly would notice it often has graphs, as hard data is usually the best guide to market trends. The information currently coming out of the lamb sector is not consistent: a survey suggests 3 million more lambs carried over but a higher kill – odd.

An observation on the lamb survey (noting I am far from a statistician) – in October 1963, producers filled in the survey. Of these, 47 per cent gave an email address and said they would provide details in the February follow-up. So there were 927 contactable farmers for the February survey, and of these, 466 participated. It seems a small number to be representing the industry and creating headlines of a mass carry-over of stock. Dig deeper, and there were 52 properties running 20,000 plus sheep in the October survey. In February, there were 10.

The one piece of consistent data coming out of the industry is a problematic US market for lamb, which is our biggest export destination.

In its latest brief on the US lamb market, Steiner Consulting listed the average import price of fresh lamb into America in early March at $5.82US pound (averaged out over multiple meat cuts), down 3 per cent in late February and 13.6 per cent lower than a year ago.

In the short term, the lamb market will not give any price joy to producers, particularly those 25 per cent in the survey who said they didn’t sell in the spring because the money wasn’t good enough.

With more shortened weeks looming with Easter and Anzac Day, the pressure is on many farmers to quit stock off stubbles to prepare for cropping; dryland paddock feed is diminishing, and confidence in the weather and a decent autumn break is low. As a result, the lamb market faces many headwinds regardless of how you interpret the survey and kill figures.