By Angus Brown | Source: MLA's NLRS
Lamb and sheep prices have started their seasonal easing. In some areas that are receiving good rain, this may open up trading opportunities as I write. Here we take our regular look at price spreads in sheep and lamb markets, and see what is cheap and what is expensive.
The Eastern States Trade Lamb Indicator (ESTLI) has eased over the last fortnight, but remains historically strong for this time of year. There are some sheep categories that are relatively cheap, and make good buying.
Table 1 shows how various lamb indicators are currently priced relative to the ESTLI and the historical range for this week. Mutton remains at a larger than normal discount to ESTLI, as it has since May (figure 1). WA, Tasmania and SA show the largest discount, with sheep currently trading around 300¢/kg cwt.
Restocker lambs are largely around their normal discount to the ESTLI. The exception to this is South Australia, where prices this week were up 70¢, and up 148¢/kg cwt in two weeks, resulting in a higher than expected premium to the ESTLI.
Merino lambs are priced well relative to historical discounts to the ESTLI, with all states except WA at better than average price level. Relatively strong Merino lamb prices may be an early indication of restocking intentions, as Merino lambs are one of the categories that might be held, or bought, when feed supplies are good.
Merino lambs in WA are cheaper than in Victoria and NSW, but are close to the average discount, and expensive relative to WA trade lambs.
Despite lamb markets being relatively expensive, there is opportunity for traders to buy sheep to use excess grass. Merino lambs are expensive, and good selling for those concerned about carrying stock through an El Nino spring and summer. If the spring turns out to be a good one, Merino lambs are unlikely to be more expensive until the New Year.
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