Is there more to supply drop than the usual winter slump?

Sheep supply continues to fall, prices in positive territory

Sheep
NUMBERS DOWN: There's been a reduction in physical sheep yardings and there are multiple factors contributing.

NUMBERS DOWN: There's been a reduction in physical sheep yardings and there are multiple factors contributing.

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Sheep and lamb yardings at physical markets are reducing week-by-week, but is there more to it than just the usual winter drop off in supply?

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Sheep and lamb yardings at physical markets are reducing week-by-week, but is there more to it than just the usual winter drop off in supply?

At Bendigo, there was a slight reduction in lamb numbers to total 12,000 head, while in the mutton section, there were only 2000 yarded.

At Ballarat, 17,600 lambs were yarded, while at Tamworth, NSW, there were 1150 lambs and 680 grown sheep.

Meat & Livestock Australia data indicated eastern states sheep slaughter was continuing to contract.

For the week ending May 15, 43,600 sheep were slaughtered, the lowest weekly throughput since June 2011, excluding public holiday-disrupted weeks.

Last week, 44,821 head was slaughtered.

Elders Bendigo livestock manager Nigel Starrick said the drop off in supply was a "traditional" occurrence at this time of year due to supply and demand, but indicated there was more to it than just that.

"There's a lot of people out there looking to restock, especially in NSW where they obviously destocked a while ago due to drought and fire," Mr Starrick said.

"And a lot of the places you drive past in central Victoria, the feed's phenomenal; the temperature's been a bit warmer, it hasn't really cooled off, so there's plenty of growth."

He said a lot of lambs had also been contracted for May and into June and July, taking them out of markets.

He also said due to earlier restrictions limiting who could attend physical auctions, the online marketplace, AuctionsPlus, had "certainly come to the forefront".

"Up until last week we only had professional buyers [in the saleyards], but we've opened the doors to store buyers now who register the Friday before," he said.

He said having more people attend physical sales had made a "small difference" to the market, but "nothing huge".

But he indicated prices had already been very good.

"Our clients are very happy where the market is at the moment, whether it's over the hooks or physical markets," he said.

"With less numbers there, yet the same supply still required, obviously the competition is stronger."

However, MLA analysts indicated the supply drop was occurring earlier than usual and said the low point could still be down the track.

"The trends are indicative of producers holding and rebuilding flocks and finding encouragement in positive winter outlooks," MLA analysts said.

"The fact that sheep slaughter has declined to this extent much earlier than would be expected highlights the challenge processors will face during the winter months, at a time when lamb slaughter is also anticipated to be extremely tight."

MLA analysts said looking ahead, winter throughput was likely to fall below year-ago levels across all states.

They said the impact of this dwindling supply had meant sheep and lamb prices had seen a modest uptick throughout May.

"The forecast supply constraints should tip the balance in favor of price support during winter," they said.

"However, the global outlook does provide some headwinds and could keep prices below the mid-year peak in 2019."

Mr Starrick preducted that prices would hold where they were now.

"I think we might see isolated prices of where it gets dearer on either lamb or mutton, purely based on type," he said.

"With Cedar Meats still out of it, when they come back, we might see a bit of a spike."

The story Is there more to supply drop than the usual winter slump? first appeared on Farm Online.

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