Lamb prices have come off the boil in the past fortnight, as bigger yardings at some selling centres, and a notable reduction in competition last week, wound rates back significantly.

At the close of markets last week, heavy lambs dipped 9c to 509c/kg carcass weight, while trade lambs were back 5c to rest at 516c/kg.

Wagga, NSW, is the largest lamb market in Australia and has the greatest impact on the EYCI most weeks. This sale generally sets the trend for the following week. After last Thursday’s major price correction at Wagga of $10-$14, we may need to tighten our seat belts for a bumpy ride ahead.

Wagga agent Tim Drum, Riverina Livestock Agency, said the heavy export market prices slipped, owing to the larger yarding and buyers only wanting to operate at a price.

It was more of the same in the mutton run, with most sheep $10-$15 cheaper. Heavy merino wethers slipped $12 and made from $68-$100. Medium and heavy ewe mutton sold from $72-$106.20. Light sheep fell up $23, selling at $22-$52.

Early lamb markets have started cheaper this week on the back of an increase of plainer stock being yarded. This was evident at Bendigo, with dry hot conditions impacting on quality in a smaller offering of 10,897. Even in a smaller yarding lamb could not uphold last week’s rates easing $2-$3. Looking at the bigger picture, prices are starting to slip below 500c/kg, with most trade lambs returning 470-505c/kg.

This translated to $115-$130.60, for trade lambs with heavy export grades over 26kg cwt making to $167.00. The National Livestock Reporting Service said light lambs sold well in comparison and were well supported by feedlots, restockers and processors.

At the Corowa’s lamb market on Monday, rates for trade lambs buckled up to $10, with quality not of the standard of recent sales. Despite the tightening supplies the better finished lines struggled to command premium prices. Heavy export lambs at 502c/kg cwt topped at $163.

Not surprisingly, the Dubbo market on Monday followed the same trends. Heavy export lambs sold $9 lower to average 497c/kg cwt. The sale for trade lambs was unpredictable and struggled to find its groove, with plainer quality a factor in the varied results. Prices were generally back $10 to average 490c/kg cwt. Mutton prices also retreated despite a good offering.

A good quality yarding of lambs at Ballarat kept prices fluctuating within a few cents per kilogram of recent rates. Trade lambs were a highlight, with processors paying from $112-$140 to average 532c/kg cwt. Heavy export lambs above 26kg gained $2-$5.

Stock and Land

AUSTRALIA'S shorn wool production for 2015/16 is set to decline by 7 per cent to 322 million kilograms greasy (mkg), a drop from the estimated 346 mkg for the 2014/15 season.

The Australian Wool Production Forecasting Committee (AWPFC) released its revised forecast today, with the decline reflecting a combination of a 4.8pc fall in shorn sheep numbers and a 2.3pc drop in average fleece weights.

Australia's shorn wool production for 2015/16 is set to decline.
In a statement, AWPFC chairman Russell Pattinson said seasonal conditions in a number of the major sheep producing regions in Australia have been drier than expected over Spring which has resulted in lower fleece weights and, more recently, reports of increased sheep turn-off.

"Victoria, Tasmania, the south-east and north-west of South Australia, and the Great Southern region in Western Australia have all experienced difficult seasons. Among other things this has caused problems with stock water availability," he said.

“The major sheep regions of Queensland continue to see very tough conditions and the sell-off of sheep continues in that State.

"Even in NSW, there are areas where seasonal conditions have been more difficult than expected.

"These tough conditions are only being partially offset by good to very good conditions in north-eastern South Australia and parts of NSW.”

The 7pc decline comes following six seasons of relatively stable wool production of between 340 and 350 mkg greasy.

The AWPFC’s final estimate of shorn wool production for the 2014/15 season of 346 mkg is an increase of 1.7pc over the previous season.

As noted in August, this increase is in line with, but less than, the increase seen in AWTA tests, ABS wool receivals and AWEX auction offerings for 2014/15.

Some of the increase in wool tests, receivals and auction offerings late in the 2014/15 season was attributed to the release of on-farm stocks held over from previous seasons as well as the forward offering of wool held in brokers’ stores and earlier than usual deliveries of recently shorn wool in response to the spike in wool prices in May and June.

SOUTHERN Australia’s hot and dry conditions have forced an increased number of lambs on the market, resulting in the Eastern States Trade Lamb Indicator (ESTLI) dropping 5per cent year-on-year, to 525 cents per kilograms carcase weight.

Last week Western Australia trade lambs averaged 487c/kg cwt, down from 517c/kg last year, while Tasmania trade lamb prices surged from 485c/kg to 571c/kg week-on-week.

Tasmania’s volatility was attributed to the low volumes, with market analysts suggesting the southern state’s trade lamb prices would return to a 20-40c/kg discount to the ESTLI in the coming weeks.

While 9pc more lambs had been processed for the year-to-date, the forecast for lamb slaughter is 21.5million head, down 3.4per cent on 2015 which finished at a record 22.9m head slaughtered.

Because of the back-to-back years of high slaughter peaking above 22m, Meat and Livestock Australia market information manager Ben Thomas anticipated 2016 was a flock consolidation year.

“There has been continual growth in the number of lambs processed every year for the past 15 years,” Mr Thomas said.

“Australia’s transition from wool production to now more prime lamb production has had a cyclical pattern where there is rise in numbers processed and then there is consolidation for a year or two, and then a rise again.”

The early spring offload of lambs and forecast reduced slaughter numbers pointed toward tighter supplies through winter.

The first pricing indication for the autumn and winter was out with JBS Australia releasing their long term forward contracts.

Prices to August for crossbred and Merino lambs reflected this potential tightening supply with contracts starting at 500cents per kilogram carcase weight for crossbred lambs and 470c/kg cwt for merino lambs for February and the first half of March.

The forecast contraction of supply in winter is reflected with JBS offering a price rise to 570c/kg and 540c/kg cwt for crossbreds and Merino lambs respectively in the last week of July.

The demand for Australian lamb in 2016 will continue to be heavily influenced by international customers.

Factors at play include New Zealand’s drought, which Mr Thomas said had resulted in lamb numbers hitting a 60-year low and could have a positive impact on Australian exports.

“As Australia’s largest competitor, this will be interesting to see just what their production will be,” he said.

However large production in China over the past two years had resulted in high volumes in cold stores, and could impact demand.

While exports to the US and Middle East were forecast to climb on the 2015 levels, the current low oil prices in the Middle East had reduced government and consumer spending.

“There are a couple of positives working in the producers’ favour but they need to be weighed up with those looming export factors that could subdue demand,” he said.

Stock and Land

THE prime lamb market seems to have developed the wobbles over the past week.

LAMBS: Colin and Allan Coyle, of Barnawatha, are pictured with Elders Corowa's Steve Grantham. Allan sold 154 shorn lambs to a top of $140 at Corowa.

There has been an undercurrent of thought, amongst processors and agents, that there was a price correction looming, with values rising sharply over the past few weeks. This was glaringly obvious at northern selling centres.

Export buyers said there is a cloud of uncertainty hovering over the global economy, with China and the Middle East facing strong headwinds on a number of financial fronts. Buyers believe the high prices paid in recent weeks are not sustainable for Australian export companies and the fall in the market late last week is a correction.

At the Wagga lamb sale in NSW last week, prices took a hit over all weights and grades. The market for heavy export lambs was unpredictable, with prices bouncing around for most of the sale. The best results were achieved for lambs weighing 30kg plus, while there was greater price variations for lambs 26-30kg. Heavy lamb values dipped to a low of $140, before recovering for the heavier pen lots to reach a top of $186kg or 494c/kg carcass weight. The same can be said for trade lambs, as domestic buyers were more selective at reduced rates of $7-$8 per head. The better shaped shorn lambs reached a top price of $146 to average 541c/kg cwt.

Agents agree that the key to how markets perform leading into autumn will be the supply of lambs direct to works and how quickly numbers decline at physical markets in both Victoria and NSW.

Meat & Livestock Australia reported lamb tonnage pushed through the half a million mark, when lamb production lifted a further five per cent year-on-year to 508,570 tonnes cwt. This is the first time Australia has produced in excess of half a million tonnes in a calendar year. Victoria has kept its number one ranking as the prime lamb state, with production increasing five per cent year-on year to 223,181 tonnes cwt. In contrast NSW comes in a poor second, producing 119,756 tonnes.

Lamb numbers decreased across early sales this week. At Bendigo on Monday numbers dropped by more than 6500 to 11,400, as the ongoing dry conditions forced many producers to offload larger numbers of secondary lambs late last year. The National Livestock Reporting Service (NLRS) said quality deteriorated again this week due to the ongoing tough season.

At Corowa NSW on Monday numbers dropped by 5000. The NLRS said the yarding at Corowa was plainer, while at Dubbo the yarding was mixed with plenty of lighter weight lambs offered. Despite tighter supplies of trade lambs in NSW, rates dropped $9-$12 to average 514c/g cwt.