Mecardo Analysis - Victorian lambs coming early should leave a gap
- By: "Farm Tender" News
- Ag Tech News
- Dec 11, 2018
- 421 views
- Share
By Angus Brown | Source: MLA, NLRS, ABS, Mecardo.
The predicted tight supply of lambs in New South Wales seems to have come to fruition. However, Victoria and South Australian supply appears to be compensating as we move through the spring flush. The question is, are lambs heavier than normal or are the lambs which weren’t killed in early spring coming out now?
It has been widely predicted that the drought in NSW would see tight lamb supply in general, and finished lamb supply in particular, through the spring and summer. This prediction has largely proved correct, but with east coast lamb slaughter running at levels similar to last year, we must be getting more lambs out of the late areas.
A crude measure of relative lamb supplies are the price differences between NSW and Victoria. Obviously tighter lamb supply will see higher prices locally and this should be showing up, with anecdotal evidence suggesting a lot of the heavy supply in southern saleyards is heading a long way north.
Figure 1 shows a gap opening up in the state trade lamb indicators, with NSW holding at 701¢ and Victoria falling to 672¢ last week. The 29¢ spread equates to around $6 per head for a 20kg cwt lamb, which is not much less than the freight cost from south west Victoria to NSW. The difference is similar in Over the Hooks Indicators. NSW Trade Lambs are quoted at 730¢/kg cwt, while in Victoria they are 696¢.
When we look at weekly lamb slaughter, Figure 2 shows that lamb slaughter has now reached the levels of last year. There were a lot fewer lambs slaughtered earlier in spring, but it seems these were never there.
Looking at the light lamb data for Hamilton, we get an indication that we might be seeing heavier lambs out of south-west Victoria this year, which is propping up slaughter. In a normal season plenty of store lambs are sold out through the Hamilton yards, but since the start of October 12-18kg cwt lamb supply is down 36%.
With total lamb supply at similar levels, the lower light lamb supply suggests that south-west lambs are heavier this year and are being slaughtered rather than going back to the paddock or into feedlots.
Key points
* Lamb supply out of NSW is tight, but the gap on the east coast is being filled by Victoria.
* It seems south west Victorian lambs are heavier than normal, and being slaughtered.
* Another supply gap is likely to appear in the New Year, especially if the flock rebuild resumes.
What does this mean?
It always fraught when you use anecdotal evidence to forecast supply. Until results of the October sheepmeat and wool survey are released, this is all we have however, and it does make sense. Fewer lambs being born overall, but similar numbers in Victoria and SA. Southern lambs are being killed early, filling the supply gap now, and reportedly, into January.
After January things could get interesting as there is likely to be a dearth in supply at some stage. This will be magnified if good rains appear and a flock rebuild begins in earnest.
Share Ag News Via