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Tuesday, March 04, 2014

Lambs continue to outperform cattle in NSW - monthly percentiles

By Augusto Semmelroth  |  Source: MLA's NLRS, ACU

Key points

  • Most lamb categories above 75th percentile rank, with heavy and trade lambs at the top 5% of 10-year prices.
  • Finished cattle prices have rebounded from the lows of mid-February but remain around the 30th percentile level.
  • Average young cattle price in NSW (EYCI-type cattle) remains at 312¢/kg cwt, the 13th percentile level.

Despite the recent recovery in cattle markets, percentile levels continue to depict the contrasting state of livestock markets in NSW. While most lamb categories are now quoted at the top 5-25% of the 10-year price range, cattle markets remain at the bottom 30-45% of their range. As expected, young cattle and cows are still among the most affected by the drought.

Lamb markets have rallied strongly in the last six weeks to accumulate gains in the order of 35% during the period. This has seen all lamb categories reaching their 75-96th percentile levels last week (figure 1). At the top of the range is the NSW heavy lamb indicator, followed by trade and merino lambs.

Light and restocker lamb prices are still lagging behind as a result of more plentiful supplies and cautious restocker demand: these categories are currently at their 75th and 78th percentile levels, respectively.

Despite the recent widespread rains and rising cattle prices, NSW cattle markets are yet to show a more substantial recovery, particularly for young cattle and cows. The average EYCI cattle price for NSW and cows are still quoted at 312¢/kg cwt (13th percentile) and 257¢/kg cwt (23rd percentile), respectively (figure 2). Finished steers, in particular the heavier ones, are finding slightly more support on the back of tighter supplies. 

What does this mean?

Most of NSW has received average to above average rainfall during February. That, coupled with some extra 25-100mm seen over the weekend in the central part of the state, should provide great relief for producers.

Both cattle and lamb markets have already started to benefit from recent rains as supply slowly tightens and restockers become more active. That scenario is likely to consolidate further with more gains expected for this week.

While trade and heavy lambs are already above their respective 90th percentile ranks, they can continue to move higher if throughput really dwindles in the coming weeks. As for cattle, they seem to have a greater scope to recover as they are still quoted at relatively depressed levels.

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