Scanned-in-lamb Merino ewes undervalued

Finding value in a market is easy in times of tough seasons as breeding stock prices suffer. And such a scenario is playing out in the ewe market this autumn.

Finding value in a market is easy in times of tough seasons as breeding stock prices suffer. And such a scenario is playing out in the ewe market this autumn.

The average price for scanned-in-lamb Merino ewes on AuctionsPlus this month has been $148 a head, which appears very undervalued against a prime lamb market which has been holding above 800c/kg carcass weight and mutton which has come off the low rates of last year and is showing plenty of promise of higher values to come.

To make an even more compelling case, the average price for a crossbred store lambs on AuctionsPlus last week was $156. On these numbers a $150 pregnant ewe could easily cover her cost in just one lambing, with wool and the ewe’s re-sale value either as mutton or a carry-on breeder.

It is a difficult decision to run an analysis piece like this as for many producers it’s a dead argument as the lack of rain, feed and stock water pressure means it isn’t possible to even consider the potential upside of breeding ewes selling for little money now.

And it is mainly seasonal pressure – plus a bit of financial constraint and reservation from farmers about running ewe flocks due to the high cost of production such as shearing – that is keeping scanned-in-lamb prices depressed.

But there has been some rainfall, the Chinese have opened their doors to taking more Australian lamb and mutton by accrediting 17 more abattoirs for export supply, and there is a changing landscape for the future potential supply of ewes due to the shift out of sheep in Western Australia and the big depletion of stock numbers from the Western District and southeast South Australia this past year due to drought conditions.

Elders Bendigo agent Nigel Starick said his advice to clients who were committed to livestock to try and “hang-in” and come out of this period with as many good quality sheep they could cope with.

He said there had been difficult decisions made in recent weeks, and the lack of demand for SIL ewes meant they had been forced to sell pregnant ewes to abattoirs as the mutton market had offered the best return.

“Knowingly selling SIL ewes to processors is not something I’ve ever really done in my 25 year career and I don’t like doing it, but we’ve had to have honest conversations,” he said.

He cited a case of 700 young three-year-old composite ewes which were SIL, still in heavy condition they couldn’t find a breeding home at $180 and were sold for mutton at an average of more than $200.

So what are the opportunities out there.

The graphic on this page shows the average monthly price for SIL ewes sold on the AuctionsPlus network for the past five years. The data is broken down by the main breeds of Merino, first-cross ewes and then shedding breeds which takes into account the Dorpers and Aussie Whites.

Scanned-in-lamb ewe prices by breed. Source: AuctionsPlus

The peak of the market was three years ago leading into the autumn of 2022. According to the AuctionsPlus data the average price for SIL ewes reached a peak average of $342 for crossbred ewes, $288 for Merino ewes and $323 for shedding type ewes.

Coming into that 2022 season producers were coming off wet seasons and big returns for sheepmeat with lambs averaging over 900c/kg during the winter and mutton tracking over 600c/kg at saleyards.

On paper last year was the cheapest for SIL ewes, with the average value on AuctionsPlus slipping to $117 for Merino ewes in April and $142 for crossbreds.

But when these figures are analysed through the lens of ruling lamb and mutton returns at the time, this year stacks up as arguably being the cheapest buying period for SIL ewes.

Last autumn when SIL ewe values were low the average saleyard rate for heavy prime lambs was at 664c/kg carcass weight while mutton was at just 253c/kg.

It meant a 30kg lamb was valued at less than $200, while a heavy 30kg ewe was returning $76.

This is well below the current ruling rates of a saleyard average of 815c/kg for heavy lambs (equalling $245 for a 30kg lamb) and 485c/kg for mutton (or $145 for a 30kg ewe). Combined this adds up to an extra $114 from meat returns compared to a year ago, yet SIL ewe prices have only improved by $20 to $60 a head.

The bottom line is on the health of the sheepmeat market and available returns, SIL ewes appear very undervalued.