State market watch: Western Australia

Key Points:

• Producers had some relief in September from very dry conditions over winter.
• Lamb indicator peaks have all exceeded 650¢/kg cwt during 2017.
• Poor seasonal conditions have seen cattle prices ease from year-ago levels.

 Sheep

Prices

Over the course of 2017, WA’s saleyard lamb indicators have all seen peaks exceeding 650¢/kg cwt:

• Restocker lamb: 662¢/kg on 3 April
• Light lamb: 664¢/kg on 30 May
• Merino lamb: 652¢/kg on 5 June
• Trade lamb: 681¢/kg on 12 June
• Heavy lamb: 664¢/kg on 17 August

Although prices have since eased as seasonal supply peaks, they still remain above year-ago levels. The WA trade lamb indicator reached 548¢/kg on 23 November, up 18% on the same time last year, while the restocker lamb indicator has been trending closer to year-ago levels, averaging 3% lower year-on-year in November. This reflects limited restocker competition in the market, arising as the result of the volatile seasonal conditions that have affected the sheep producing regions of the state.

The mutton indicator has also been trending well above 2016 levels, reaching a peak of 528¢/kg in May. In November, the mutton indicator was 347¢/kg at 23 November, up 16% on year ago levels.

The sheep market has continued to find support on account of a few factors. These include improved seasonal conditions, high wool prices, reduced New Zealand exports, tighter Australian production and solid demand, both domestically and internationally.

Slaughter

Lamb slaughter for the year-to-date (January–November) totalled 2.04 million head, back 22% on year ago levels. WA experienced particularly dry conditions during winter, with a break in the season only coming in September. The recovery in seasonal conditions and crops, combined with the smaller flock size, saw tighter availability of lambs for slaughter since August.

Sheep slaughter has also seen a decrease, although to a lesser extent, easing by 5% to 1.03 million head for the year-to-date. There was a rally in the number of sheep slaughtered from July, as producers looked to turn off stock as a result of the tough seasonal conditions and a lack of heavy lambs available to processors. This somewhat offset the tighter availability earlier in the year.

Throughput

WA saleyard throughput has increased for both sheep and lamb. Lamb yardings totalled 697,000 head for the year-to-date, up 38% year-on-year. Sheep too saw a marked increase for the year-to-date, to 679,000 head, up 50% from 2016.

The reduction in lambs going direct-to-works from August led to processors sourcing more lambs from the saleyard, with the proportion of lambs going to processors in October lifting 23 percentage points from October 2016, to 43% of lambs sold. It may also reflect the more competitive market, currently at play in the saleyard system.

Cattle

Prices

After starting the year with relatively strong prices, WA’s cattle market has tracked consistently below year-ago levels in the latter half of the year, in line with trends in the eastern states.

As of 23 November, the trade steer indicator was 311¢/kg, down 5% year-on-year and the medium cow indicator was back by 10%, at 172.8¢/kg, albeit from the record highs of late 2016 and early 2017. The poor seasonal conditions experienced throughout the state have been a contributing factor to the decline in prices in WA, limiting restocker interest.

Throughput

Despite cattle availability now starting to ramp up in line with the seasonal trend, numbers coming through WA saleyards are lower than 2016. Saleyard throughput for the year-to-date totalled 121,603 head, down 17% from year-ago levels.