Violent price swing to unsettle market flow

The sharp plunge in lamb market prices has left a sour taste in the mouths of many


Market Analysis
Horsham agents were disappointed last week when processor buyers put the cleaners through their fortnightly lamb market.

Horsham agents were disappointed last week when processor buyers put the cleaners through their fortnightly lamb market.

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Horsham stock agents were bitterly disappointed when processor buyers put the cleaners through their fortnightly lamb market.

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Horsham stock agents had the right to be disappointed last week when processors put the cleaners through their fortnightly market, slashing prices by $60 to $80 a head compared to the centre’s previous market.

“It’s no good for anyone, especially our clients, to have such huge swings in back to back sales,” Horsham stock agents association president Dale Dridan said.

He said it was hard for agents to explain to growers what had occurred.

“And it’s even harder for agents to understand because we are the ones asked to maintain a steady flow of stock through the physical market for the buyers to buy,” he said.

“We fully accept we had a sale out-of-the-box in the previous market when two interstate buyers blew in and destabilised the balance of the demand for the day.

“It was easy to see there was plenty of spirit involved in the competition that day, with some buyers operating outside of their usual weight specifications.”

He said prices flew quickly to $8.50 to $9.00c/kg in a $30 a head market shift.

“But in our next sale on Wednesday, several regular buyers, including the region’s largest exporter, plus two interstate buyers, without notification, didn’t attend the sale,” he said.

As a result, prices collapsed by $60 to $80 a head and more to around the $6.00/kg mark, which saw one agent withdraw more than half of their yarding from the sale.

Mr Dridan said the difference in Horsham sales was extremely dramatic.

“There were more than 200 pens in our previous market sold at prices exceeding $200 a head and last week there just two,” he said.

“[They were] very much similar yardings, young sucker lambs in the peak of the season in peak condition.”

He said if the fall had been half or a bit more, they could have accepted it and moved on, “but this has left a lump in our throat”.

And Rodwells Wimmera area manager Wayne Driscoll said worse results followed.

“All this has done is promote a rush away from the physical market to direct sales and caused a bank up at the works,” Mr Driscoll said.

“And this will only further create an ebb and flow effect in physical markets until the supply can be stabilised.”

He said they know it had been a difficult season and people were keen to sell as the season matures.

“And we know also that demand and prices two weeks ago were unusually strong and invited people to sell,” he said.

“But it appears it was folly and by holding back even by a week or two until the market can re-establish its demand should negate further violent price fluctuations.”

As a footnote, in rural papers last week, JBS Australia issued forward contract prices for November to January, based on rates between the recent highs and lows.

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The story Violent price swing to unsettle market flow first appeared on Stock & Land.

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