By Matt Dalgleish | Source: MLA, NLRS
At the start of the week we published the sheep and lamb percentiles for NSW compared to the national percentiles for each category. This article follows up the earlier article with an outline of the percentiles for Victorian and South Australian sheep and lamb.
As outlined in the NSW percentile article these tables are a measure of how often the historic price data has been above or below a particular level. It can give an insight as to whether a market has more upside or downside, and how large this may be.
A more detailed explanation of how to use a percentile can be found here.
Victorian percentiles for re-stocker, trade, heavy lamb and mutton are currently below the national percentiles for the same categories (Tables 1 and 2). However, merino and light lamb percentiles are slightly higher than the national figures. It is interesting to note that last week’s MLA yarding and slaughter figures for Victorian mutton both came in below the five-year average, down 25% and 39% respectively on the average for this time of year. This would suggest that there is room for Victorian mutton prices to firm in the coming weeks if supply here remains tight.
South Australia appears to be a case study on tight supply, particularly for light lamb, as the percentile figures in table 3 demonstrates. All categories of SA lamb and sheep, other than heavy lamb and mutton, have percentile figures above the national percentiles for the same category. Prices for SA light lamb are particularly robust sitting at the 97.7% percentile while the national light lamb percentile is at 86.3%. As is the case in Victoria, SA mutton prices also have potential to probe higher.
Relatively firmer prices in SA when compared to the national prices are not unsurprising given the recent drop in yarding figures in this state. MLA reported a mere 398 head of sheep yarded in SA last week, well below the five-year average of 5,628. Lamb yarding displayed a similar pattern with throughput of 1,290 head compared to the five-year average of 15,205 for the same time of year.
Supply is the key at this time of year as to when the seasonal price rise begins in earnest. Historically over the Australia day week there is a dip in yarding levels which often recovers the following week. Yarding figures from last week for NSW saw a return to longer term averages for the first time this year after sitting well above the averages for the first few weeks of 2016.
Given the very low supply out of SA recently and the fact that the Victorian supply flush has peaked it is really only stock coming out of NSW that is likely to delay the inevitable supply squeeze. Keep an eye on NSW figures in particular for the signal that the rally can begin in earnest. ESTLI is still on track for a test of 620-640¢ by April/May 2016.
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