Analyst Intel

12 July 2019

ACROSS THE RAILS | Word of strong prices for lambs at auction is spreading fast

BySuz BremnerSuz Bremner

Word of strong prices for lambs at auction is spreading like wildfire and is responsible for larger than normal volumes trading through the sale yards at this time of year. It is more obvious in the North Island where plenty of lamb fatteners call home in Manawatu and Hawke’s Bay and the yards in these areas have been overflowing. Store lamb volume has been consistently high since late March and there has been little let-up to date.

The high volume is doing little to dampen prices, especially for short-term lambs. Those in this market are killing each week and re-entering the store market weekly. They have the capacity to attract contracts, meaning their budgets rarely change week-on-week. It more comes down to who is there to compete against them on the day. Heavy male lambs are trading at $160-$170 and next cut $145-$160 and it’s likely the supply of these types will run out before the demand does given how late in the season it is.

There’s a bit more give and take for medium-term lambs, especially ewe lambs. They need to be farmed longer to finish and so re-entry into the market for buyers is not as frequent. And, after a few weeks of frenzied buying, this market has eased as most appear to be full for the time being. They will be back though and some significant rain through Hawke’s Bay will only add more fuel to the fire so I expect to see that market rebound. Good ewe lambs are averaging about $145 while medium types sit at $130-$135.

The question on everyone’s lips, though, is how many old season lambs are left in the system? A lot of the male lambs coming to the yards have changed owners at least once, which does give a false sense of volume available. Ewe lambs tend to be directly from the breeder as replacements are drafted out and any surplus offloaded. But whatever their origin, the throughput levels are not sustainable given the lateness of the season. There was a noted drop in volume at South Island yards last week and it is only a matter of time before North Island follows suit.