Sheep price drop a mystery

Fast forward more than a year and the talk is now about what is the realistic price for sheep.

Since February, lamb and mutton prices have continued on a downward trend as many industry representatives believe the market was levelling off to a reasonable price.

So what is the reason behind the massive drop?

When Farm Weekly spoke to a number of industry representatives they said it was the question nobody could answer.

Landmark livestock auctioneer Tiny Holly said it was as good a question as you could get.

"Nobody can give you an answer to that question because we ask that question all the time," Mr Holly said.

"There seems to be no answer."

Mr Holly said everybody in the industry knew the massive prices last year wouldn't be able to last, but didn't predict a drop by as much and as quickly as it has.

"We would have loved it to last but it was never going to stay that high," he said.

"But I don't think we thought it was going to drop $40 or $50."

He said the market at last Tuesday's sale at Muchea had lifted slightly with mutton reaching $85 and lamb reaching about $110.

He said the quality of some of the lambs at the top end had improved and that had impacted price but admitted the quality died off pretty quickly.

Katanning saleyards manager Rod Bushell said the lamb price had definitely come off a lot but the mutton price had begun to plateau.

"I know after the last week or two, mutton has been getting stronger and that is just due to supply and demand because there is not a lot of mutton coming in," Mr Bushell said.

"I think that would have stopped the mutton price from falling and it has definitely started to level off."

Mr Bushell predicted lamb prices should ease and hold around the $90-95 mark.

"Numbers generally drop off at this time of year as processors begin to think about shutting down for maintenance and so on," he said.

"But, in saying that every year I think it will drop off but this time last year we were really busy.

"Just before this time people were short of feed and we had a lot of sheep coming in."

With rain hitting the Wheatbelt and Great Southern over the past week saleyard numbers are expected to ease as many farmers continue to try and rebuild their flock following the drought which resulted in a number of WA livestock heading east.

Mr Bushell acknowledged it was a complete turnaround from the situation sheep prices were in last year.

"The prices and the numbers last year were huge and I guess it is a double whammy," he said.

"There was a lack of numbers out there to start with because of what had happened over the last two years.

"Also blokes are trying to hold onto as many ewes as they can to build their numbers back up."

Mr Bushell said sheep producers were disappointed once the lamb price fell under $5 a kilogram.

He said producers didn't expect to see such a massive drop in price for lamb and mutton from last year.

"I guess sheep prices had room to come back a bit but to drop from a $100 to $60 you know it's nearly half - that is pretty dramatic," he said.

"Everybody was pretty disappointed once the lamb price got under $5/kg.

"I think $6.50 was unsustainable but had it stayed at $5/kg most people would have been happy.

"The fact that it has dropped under means there are a lot of unhappy people."

Katanning livestock agent Chris Elliot said the market in Katanning was marginally stronger last week but the quality in the yards was average.

He said he had heard prices had dropped over recent months due to processors' inability to sell the product at the other end.

Mr Elliot stopped short of saying why the prices had dropped so much in such a short time but said it was not all doom and gloom for sheep producers.

"Prices are still strong overall," he said.

"The prices last year were exceptional.

"Now they are still a really good price but they just aren't at the levels they were last year."

He said he didn't expect prices to drop off much more particularly as yardings were expected to drop with the recent rains.