Spring lambs are showing up at processing plants and in the store pens, but in many cases it’s more of a trickle than a flow. On-farm feed conditions are influencing buying and selling patterns. While slaughter rates are tight, good feed levels don’t appear to be giving farmers the confidence to step into the store market.
Market enthusiasm has been slow to build, but its early days. Some of this is reflective of the lack of lambs reaching finishing weights and therefore remaining on-farm. This limits the opportunity to start buying in decent numbers of store lambs. Others that would normally sell store are preferring to hold on to lambs given the feed that’s building ahead of them. Of course, it’s not the same for every region and there are some that have already tested the store market and have come away relatively happy.
AgriHQ analysis shows farm gate slaughter prices are currently sitting $2/kg below this time last year, therefore limiting store values.
Once the store market gathers momentum, there will be less focus on how it started and more focus on how it finishes up. One thing for certain is traders are going to be competing for a smaller pool of lambs this season, and that could mean cheap store lambs aren’t as plentiful to come by.
The recently completed 2019-20 processing season covered 53 weeks, which pushed export lamb slaughter to 19 million head. This season, Beef + Lamb NZ have estimated a one million head drop in the lamb crop will reduce the export lamb slaughter closer to 17.4m head. While this number is currently under revision, it will clearly be less than last season. Not only are meat companies going to have to deal with significantly less lambs compared to last season, but on-farm competition for store lambs is likely to remain strong through the season. This is on the proviso that NZ does not head into another covid-19 lockdown that would challenge any status quo.
Typically store lamb prices follow slaughter prices trends.
AgriHQ November Livestock Outlook indicated a clear trend for lamb prices into 2021, which would suggest store values will edge lower. Back in 2018 the market actually saw store lamb prices track higher into December while slaughter prices came down. This was due to a very strong grass market operating in the weeks before Christmas. However, this trend can also develop as crops come on stream and store buyers front up looking for numbers.
Plenty of green feed crops are already in the ground, as farmers look for ways to mitigate summer feed shortages. Most of these crops are earmarked for store lambs. It does raise questions of where these lambs are going to come from as this is the first-time lamb slaughter estimates have dived below 18m head. If the market strengthens to a level that justifies offloading store lambs and replacing with a different class of stock, we could see the recycling of store lambs through the sale yards as some opt to resell rather than finish. This trend has emerged over the last two winters but if justified, it could show up earlier in the season. This might go some way to offsetting what could be the smallest export lamb slaughter season to date.
If store lamb prices do climb to a desirable level, we could see more ewe lambs being redirected out of breeding programmes and into finishing programmes – thereby further reducing future flock numbers but improving store lamb availability.