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Thursday, November 13, 2014

Victoria and SA dominate east coast lamb throughput

By Augusto Semmelroth  |  Source: MLA's NLRS

Key points

  • Since September, Eastern states lamb yardings tracking close to 10% above record levels seen in 2013.
  • Declining saleyard throughput in NSW since August more than offset by increasing supplies from Victoria and SA, which are running ahead of seasonal trend this spring.
  • As of last week, Victorian and SA yardings combined accounted for 64% of the total east coast throughput tally while, on average, they track around the 50% mark at this time of the year.
  • Early spring sales in NSW and now in southern markets will impact lamb supply in early 2015, which bodes well for lamb markets after the New Year. 

2014-11-10 VIC-SA Supply Article FIG 1

2014-11-10 VIC-SA Supply Article FIG 2

2014-11-10 VIC-SA Supply Article FIG 3

Among the most commented trends related to lamb supply this spring has been the fact that slaughter and yardings have been tracking well above year-ago and 5-year average levels on the east coast. Today, we take the time to further examine this trend, assess where supply is coming from and how this current pattern might impact lamb throughput down the track.

As mentioned repeatedly over the last couple of months, spring lamb supply has surged ahead of its usual seasonal trend this year to see saleyard throughput surpassing the record levels seen in 2013. To put this scenario into perspective, figure 1 shows the weekly lamb yardings on the east coast for 2013, 2014 and the 5-year average.

After bottoming at 102,879 head in the first week of August, numbers have increased steadily until the end of October to reach 192,430 head, before retreating last week to 179,634 head. Since September, eastern states yardings have tracked 8.2% above year-ago levels and also 13% higher than the 5-year average for the period.

While these stats paint a clear picture about the overall trend in lamb supply on the east coast, they fail to reflect what’s exactly happening at the regional/state level. A closer look at the breakdown in yardings by state can show more accurately how things are faring in different regions.

Instead of looking at the absolute yardings figures for each state, an efficient way of assessing where the lambs are coming from is to check how much each region accounts for the total eastern states tally. With that in mind, figures 2 and 3, respectively, show the proportion of supply coming from NSW and VIC/SA combined.

As a general rule, NSW new season lamb throughput starts to flow earlier in spring to see yardings peaking at around 70% of total numbers by August/September. From that point onwards, supply starts to shift south to see the NSW’s share decline steadily until December. Victoria and SA, on the other hand, see yardings rise progressively from September until reaching a peak of 70% of total east coast supply by December.

On average, the point of convergence between northern (NSW) and southern (VIC/SA) supplies occurs in the first week of November when numbers are evenly distributed (50/50 split). This year, this transition has occurred three weeks earlier. As of last week, 64% of the east coast was already coming out of Victoria and SA.  

What does this mean?

Although simple, this analysis helps us to better understand the dynamics of lamb supplies on the east coast this spring. These numbers do not only reinforce the idea that lamb throughput has shifted south much earlier this year but also demonstrate that the supply flush in NSW has lost momentum. On that note, NSW yardings have already fallen 10-15% below 2013 levels in the last two weeks.

Going forward, southern lamb supplies are unlikely to wane until Christmas, unless seasonal conditions improve substantially in the coming weeks. Yet, the more lambs that make their way to the yards now, the greater the impact on available supplies after the New Year will be. That, coupled with the already lower throughput in NSW, will see overall supply levels tightening considerably in early 2015. This scenario bodes very well for lamb markets next year. 

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