Heavy lambs fail to weigh down markets

There was a lean national offering of 70,677 at opening new year sales where prices paid for heavy lambs jumped 52 cents per kilogram on last year's closing sales, to average 543 cents per kilogram carcase weight (c/kg cwt).

Heavy lambs climbed $11, to average $145 per head, compared to the close of trade in December.

New South Wales and Victoria offered 90 per cent of the offering at an average 559c/kg and 534c/kg respectively.

Riverina Livestock Agents auctioneer James Tierney refuted claims made by processors last year the increase of heavy lambs in the coming months would lead to major discounting.

"There was no evidence at all that the increased supply of heavy lambs, up to 32kg, would soften prices, in fact heavy lambs were making as much a kilogram as anything," Mr Tierney said.

"It doesn't appear to be panning out that way and a number of processors are absorbing over 26kg lambs now.

"Current demand is telling us the market can handle them."

The largest New South Wales sale was yarded at Wagga Wagga with 20,530, including 16,750 lambs.

The medium and heavy trade weight lambs rose $10 to $12 on last year's closing market, selling from $108-$136/head to average 545-570c/kg cwt.

The large yarding of heavy lambs attracted solid competition and sold between $130-$168/head, while above 30kg lambs sold from $154 to a top of $193/hd, or 510-540c/kg cwt.

Mr Tierney said an influx of heavy lambs was expected in late February and March which could soften prices, but cheap grain would cushion any major price dip.

"If the market gets pulled back too hard, too quickly, grain will be used as an option to hold numbers which will regulate the market," he said.

Almost every sale last week reported mixed quality yardings, which Mr Tierney attributed to pasture becoming rank and unpalatable for stock in many regions with the top quality mainly supplement fed lambs.

While heavy lambs were forecast to trend at current prices, there are concerns the market would continue to escalate for restocker lambs.

"You would think we have nudged the price ceiling now (at 654c/kg)," Mr Tierney said.

"As cheap as the grain currently is, the mathematics are not where they should be.

"Once you put grain into them, you rely on the market and there are no heavy contracts out there to justify (these prices)."

Airfreight chilled lambs to the Middle East are also driving the light lamb market for Muslim Kill (MK) specified lambs which target weights from 8-16kg.

Katanning offered 5000 lambs of the 10,820 yarding with strong competition bolstering prices by $5/hd on last year's closing trade weight lamb prices, selling from $95-$108/hd.

Heavy lambs fetched $107-$128/hd.

Similarly to the Eastern States' sales, restockers are battling buyers for the MK airfreight market for light lambs which Katanning saleyards manager Rod Bushell said had ignited prices.

A bumper close to spring has slowed the volume of stock hitting the WA market, which Mr Bushell said had amplified major supply concerns for buyers this year.

"Our numbers are well down on what they have been so processors are worried about numbers," he said.

"A lot of their heavy lambs are contracted so they have an idea of what is coming in the next month but those chasing lighter lambs through the saleyard are worried the numbers won't be there.

"(State) flock numbers are down one million head in the past 12 months – from 14.5m to just over 13m – so it is a big worry at present."

Mr Bushell said drought conditions forced widespread offloading of stock in 2015 which lead to the flock contraction, as well as buoyed prices flushing further numbers out of the system.

"Our numbers are down to unsustainable levels," he said.

"But I get this feeling because of the wool prices and poor cropping prices, people are keeping extra breeding ewes so it might not be great but I can see in the future our numbers will increase again.

"(Flock recovery) will be a slow process because so many have terminal sires now."

Hamilton, Victoria, kicked the year off with the biggest sale of the week when 30,500 lambs were yarded.

Prices for heavy and trade weight lambs were up $15/hd on December sales, with three to four score lambs sold from $127 to $154/head, or 517-596c/kg cwt.

Four score lambs sold from $140 to $181/head, averaging 543c/kg cwt.

"Last week's market was our dearest for this selling season on a per kilo basis – a lack of supply drove that," Hamilton Stock Agents Association president Craig Pertzel, Kerr & Co, said.

"I'm told there will be a lot of export weight lambs come out once they get enough skin on them which should be in the next couple of weeks.

"Prices might ease slightly then but once we get into April and May you'll see lamb prices get very dear."

Mr Pertzel believed a lack of restocker lambs being absorbed for backgrounding would drive further supply challenges.

"There would be half the number of lambs being put out from the Hamilton market this year than the previous year," he said.

"Producers have sold down because the bottom end of the job has been so good in the past six weeks."

Livestock agent Craig Oliver, James P Keady, Cowra, New South Wales, said processors' heavy discounts on lamb cwts above 32kg was preventing any deluge of extra heavy lambs on the market.

"These discounts have encouraged my clientele to turn lambs off at 28-32kg cwt rather than carrying them out to heavy weights," he said.

In SA, Mount Gambier started the year with a tidy $4/head rise on last year's closing prices for heavy lambs.

Condition three score trade weight lambs sold from $111-$125, to average 530c/kg cwt, while heavy lambs sold from $124-$152, with two pens jointly topping the sale at $170.