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Young light lambs hold trade premium
17 September 2020
Key points:
- Young lambs dominate eastern states yardings over old lambs
- Trade lamb margin holds strong between young and old lambs
- Heavy lamb margin declines between young and old lambs
The number of new season lambs entering eastern states has continued increasing, with throughput of young lambs to processors for September-to-date matching the total throughput for the month of August at 173,000 head. According to the National Livestock Reporting Service (NLRS), the first two weeks of September have seen a 40% increase in the number of young lambs to enter the market compared to year-ago levels, with throughput of old lambs declining 5% for the same period. The above-average seasons in key sheep producing regions have allowed for an earlier supply influx, with key western Victoria saleyards yet to see the peak of new season lamb throughput.
Historically, there is a clear seasonality across price margins between young and old lambs in trade and heavy weight categories. However, 2020 has shown a contrasting trend. In recent years, the first half of the year has seen heavy weight lambs trading at a higher margin to their younger and lighter counterparts. However, in the second half of the year the market dynamics shift, with new season lamb supply entering the market, redirecting demand from producers and processors to young lambs, with processors willing to pay a premium price for younger stock as opposed to older, heavy lambs.
A key difference in the lamb market throughout 2020, compared to previous years, is the decline in the heavy lamb price margin each month since July. Typically, prices for heavy lambs increase through the winter months, as processors look to secure stock over winter that fit the heavy weight category. This year has, however, created many challenges for processors to increase throughput of heavy lambs, prompted by impacts of COVID-19, which have resulted in a demand shift. For September-to-date, the current young trade lamb price is averaging $150, with older lambs reported at $136/head. The current price for heavier young lambs is averaging $169, with old lambs averaging $168/head. Therefore, the price margin in September for heavy lambs is inconsistent with previous years, indicative of premiums in the market for lighter new season lambs.
© Meat & Livestock Australia Limited, 2020
