Expect volatile indicators for sheep and lambs

Victorian and NSW lamb yardings, when compared month-on-month and year-on-year to the same week in February and 2020, have acted in complete opposites. NSW supply has fallen by 17.4% over the past four weeks, while Victoria’s supply only fell by half as much at 8.5%. Although when comparing year on year, NSW yardings softened by 8% while Victorian supply dwindled by 16%.

With recent rainfall and shortened weeks due to the Easter break, in similar fashion to the recent erratic behaviour of the cattle market, lamb indicators have the potential to be volatile into the short-term, driven by uncontrollable variables.

Lamb prices continue to operate strongly as the winter cropping program approaches, offering enticing return on investment and profit-making opportunities to turn off lambs at the yards. The risk and return of turning lambs off throughout this lower supply period, or holding onto stock before selling weeks return to normal volumes, will influence producer decision-making over the coming fortnight.

A further influencing factor is the continuation of challenges surrounding transport access to markets following receding floodwaters. Dependent on regions, this will continue to support an already soft supply and may continue for some weeks.

Comparing the sheep market year-on-year between NSW and Victoria delivers a further interesting insight, as year-on-year and month-on-month, both states are operating in a similar way. NSW sheep supply over the past month has fallen by 60.1%, while Victorian supply has remained relatively stable to ease by 6%, or 1,980 head. Although to compare NSW year-on-year, its supply also fell 60%, or 16,000 head, while for Victoria, sheep supply remained stable.

The sharp fall in NSW supply explains the lift in the Eastern States Mutton Indicator by 39c/kg in the last month. With light sheep still in short supply across the markets and demand from processors continuing, these market conditions are conducive to prices supporting favourable margins for producers on their stock. Similar to lamb, expect mutton supply in NSW to continue to remain tight in certain areas as floodwaters continue to hinder transport access.

Both the lamb and sheep markets are in a position where supply continues to fall, either driven by producer behaviour or factors that cannot be controlled. In the coming weeks, as transport access recovers, expect yardings for both lamb and sheep to return to annual averages as the winter season approaches and producers turn their focus towards lambing.

© Meat & Livestock Australia Limited, 2021