Surge in Vic light young lamb supply drives seasonal price trough

24 September 2015


Lamb prices have eased significantly in the past two weeks, as the seasonal influx of new season lambs come onto the market. While the decline in lamb prices has been large, 50-80¢/kg cwt in three weeks, it has been off a high base, as illustrated in Figure 1.

ES-trade-lamb.bmp

Compared to three weeks ago:

  • The NSW trade lamb indicator is back 69¢, at 526¢/kg cwt
  • The Victorian trade lamb indicator is back 71¢, at 521¢/kg cwt
  • The SA trade lamb indicator is back 52¢, at 472¢/kg cwt
  • The WA trade lamb indicator is back 87¢, at 459¢/kg cwt
  • The Tasmania trade lamb indicator was steady, at 573¢/kg cwt

A primary driver putting downward pressure on prices has been the increased numbers of young light weight lambs coming through Victorian saleyards. Following a drier than usual winter across most of Victoria, particularly in the Western District, producers have turned-off lambs at lighter weights as concerns about feed conditions and the possibility of an El Niño driven dry spring and hot summer ahead weigh in on marketing decisions.

As illustrated in Figure 2, the influx of light (below 18kg cwt) new season lambs coming onto the market at this time of year has been greater than the past two years, with almost 40% of the total lamb yarding falling into this category.

Young-light-lamb-Vic-yarding.bmp

In contrast, the portion of young light lambs coming onto the market in SA and NSW is roughly in-line with previous years, at 11% and 35% of the lamb yarding, respectively.

Nevertheless, it appears the market has finally entered the seasonal price trough. Looking ahead, prices typically bottom out in October and November, as the full force of the Victorian new season lamb supply hits the market. In 2014, the eastern states trade lamb indicator reached a seasonal low of 449¢/kg cwt in the last week of October. Working in vendors’ favour this year is a much lower A$ (supporting export prices) however, as always, seasonal conditions and the impacts of an El Niño will drive turnoff.

Total lamb yardings at MLA reported markets were mixed this week:

  • NSW throughput declined 19% week-on-week, to 91,131 head
  • Yardings in Victoria were up 1%, at 34,551 head
  • SA lamb supplies lifted 37%, at 21,418 head
  • WA throughput declined 16%, to 10,485
  • Tasmania yarded 435 head, up 32%

Direct-to-works prices also eased this week, with the MLA over-the-hook (OTH) indicators declining across all states.

  • The OTH heavy trade lamb (20-22kg cwt) indicator in Victoria eased 34¢, to 560¢/kg cwt
  • In NSW, the heavy trade lamb indicator eased 16¢, to 553¢/kg cwt
  • SA eased 22¢, to settle at 527¢/kg cwt
  • Tasmania declined 15¢, to 575¢/kg cwt
  • The WA indicator slipped 6¢, to 537¢/kg cwt

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