Analyst Intel


31 July 2020

ACROSS THE RAILS | Store lamb prices still defy logic

Not too long ago AgriHQ brought to light concerns about the gaping hole between store lamb prices and outlooks for schedule prices. The figures just didn’t stack up and some market adjustment was needed to bring everything back into line. Well we have seen a market adjustment, just not in the right direction.

In the past week, store lambs at Feilding and Stortford Lodge sales have risen dramatically as big operators battle it out to secure lines. The increases fly directly in the face of international demand – lamb schedules have been fairly consistent tracking around $1/kg CW behind last year’s levels. Yet, at these last two sales prices for both male and ewe lambs have increased to where they now meet last year’s prices, which defies logic. But there is actually quite a simple explanation though it won’t please farmers looking for a small number of reasonably priced lambs to eat new growth.

Lambs in yard flat

At both Feilding and Stortford Lodge there are several very big traders and finishers doing business. They also buy in the paddock and have had success in doing so at very reasonable prices, leaving room in budgets to pay a bit more to secure other lambs if need be. That need has had to be met in the past few weeks as paddock sales start to dry up and the operators have found themselves up against each other on the rails at auction, effectively pumping prices up. Despite paying more at auction the prices paid earlier mean that on average they are still coming in under or just on budget. 

It has been a good season for trading lambs as well, which has also allowed more flexibility in their budgets. While that is great news for those who have lambs to sell it has become a bit of a David and Goliath battle, with the lesser budgets of smaller operators blown out by the larger traders and finishers. 

The reality is store lambs are overvalued compared to international outlooks but given old-season lamb supply will continue to decline that doesn’t look set to change any time soon.