Producer pain as price drops

27 Sep, 2012 02:00 AM
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THE 'effective ban' on live sheep export has hit producers' hip pockets with export wether prices dropping up to $30 a head while export permits were being sorted.

And industry sources say prices are set to stay down until the backlog of sheep that built up during the delay is cleared.

In the last week, in particular, sheep prices took a heavy hit on the back of the live export issues surrounding permits for shipments, meaning live exporters were out of the market.

There was 8000 sheep at Muchea last Tuesday and prices for export wethers dropped to $65 amidst little export competition.

Elders auctioneer Roger Fris said exporters were still not at the saleyards because they were working through the backlog.

"Wether prices reflect limited demand with best drafts ranging from $45-$65," Mr Fris said.

"Exporters are not buying yet as they work through the contracts because all the boats are full because of the numbers still sitting on farms."

Mr Fris said the feeling around the saleyards was not good.

"Everybody is feeling a fair bit of disappointment," he said.

Westcoast Livestock auctioneer Chris Hartley said ever since the Pakistan issues came about there hadn't been a lot of confidence in the market.

"It is a bit of a perfect storm at the moment with live exports looking shaky, lamb supplies around the world over supplied, mutton over supplied and a lot of areas with limited feed. It is a combination of a number of things put together."

But with permits reissued earlier this week does that mean prices will be on the way back up?

The response from agents is that it is unlikely in the short term.

It is believed the delays of the last few weeks have caused 300,000 sheep in WA to be left high and dry and it is going to take time to clear the backlog.

WA Live Exporters Association (WALEA) chairman John Edwards this week made it clear that getting rid of this backlog would also depend on the availability of vessels.

Livestock agents seem to agree with most predicting a tough short term with prices beginning to rise later in the year.

"Some of the shipments are pretty big and they can take a lot of sheep, but it is hard to say when they will catch up and get rid of the backlog," Mr Hartley said.

"Crystal balling is always hard with sheep but in the short term I think there is an over supply and a shortage of buyers and we have a situation in the bush where feed and supply are both declining."

Mr Hartley said the market would eventually correct itself but admitted there would be some short-term pain for producers.

Landmark Katanning agent Mark Warren said prices had been gradually falling over the last two months but the live export issues just exaggerated the decline last week.

"The last couple of weeks with the live export dramas the mutton job has come off a fair bit but lamb is still going alright," Mr Warren said.

"Lambs in the market are about $3.80-$4 per kilogram but you can get better money over the hooks.

"The price is obviously a lot cheaper than the last couple of years but you can still get some decent money."

He said live exports still underlined sheep prices and the last week has showed what would happen if live exports were out of the market completely.

"People saying that we can just process the meat here and send it chilled overseas, yeah good luck with that, because we don't have the people and we won't have the facilities to do it," he said.

"Most of the abattoirs are at full capacity now and we can't handle it."

Speaking on Monday after live export permits had been approved, Mr Warren didn't think the approvals would have any immediate impact on prices at this week's Katanning sale.

"We probably won't see the impact in the yards for another two or three months," he said.

Adding to the issues associated with the live export delay is that processors are also running at full capacity.

WAMMCO says it will not be too active in the saleyards over the next couple of months as it is fully booked until November.

WAMMCO chief executive Coll MacRury said as a co-operative its shareholders got first option and that pretty much has the abattoir full for another two months.

"We are only buying here and there in the yards and just where we need to," Mr MacRury said.

"We have mutton orders coming up which we might have to fill so we might look back to the saleyards but generally we are not going through the yards."

Mr MacRury said the co-operative was working at full capacity and the Katanning plant was already doing overtime.

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