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Tuesday, September 20, 2016

No sign of a spring lamb flush from Victoria yet.

By Matt Dalgleish  |  Source: MLA, NLRS, ACA

Key points

  • Traditionally the big surge in east coast lamb supply during Spring emanates from Victoria and, to a lesser degree, South Australia
  • The seasonal pattern in NSW lamb throughput is much more muted during the year with an average gain in volume into early Spring of 42%
  • Percentage volume gains in lamb supply for Victoria and South Australia usually occurs later into Spring than in NSW and is much more pronounced, with an average increase of 366% for Victoria and 180% for SA

2016-09-20 LAMB FIG 1

2016-09-20 LAMB FIG 2

2016-09-20 LAMB FIG 3

The Eastern States Trade Lamb Indicator (ESTLI) closed last week with a late surge to 621¢/kg cwt, a 6.8% increase in the last three weeks, as wet weather to much of the south east of the nation appears to be delaying the onset of the spring lamb flush from Victoria. South Australian lamb throughput is showing signs that lamb supply is on the increase there, so when will the Victorian supply start to come forward?

Traditionally the big surge in east coast lamb throughput during Spring comes out of Victoria and to a lesser extent South Australia. Analysis of the five-year average pattern of lamb yardings in NSW shows a steady build up in numbers from around 70,000 head during the April/May to a peak of around 100,000 head in early Spring, representing a 42% increase in lamb numbers, before staging a decline back towards the 70,000 head region at the end of the year – figure 1.

In contrast, the surge in throughput for Victoria during Spring comes later than in NSW and is much more pronounced – figure 2. The five-year average pattern for Victorian lamb yardings demonstrates the significant contribution made to east coast lamb throughput from Victoria growing from around 30,000 head in early Spring to a peak during December in the 140,000 head vicinity, a 366% increase in lamb numbers. So far this season the Victorian lamb yarding numbers have been flat lining since August, the lack of spring supply keeping east coast lamb prices supported.

South Australian lamb throughput displays a similar Spring increase to Victoria, albeit on a smaller scale in terms of both number of head and percentage volume gains – figure 3. The normal seasonal pattern in South Australian lamb throughput, as indicated by the five-year average pattern, shows an increase from around 12,500 head in early Spring to a peak during December of around 35,000 head, an increase in volume of 180%. SA lamb throughput appears to have bottomed out for the season in late August and has begun to trend higher posting an increase of 264% over the last five weeks, indicating that the spring flush for 2016 has begun in “The Festival State”. 

What does this mean?

The recent lift in South Australian lamb throughput suggests that the Victorian surge isn’t too far away and should hamper any further lift in the ESTLI. A quick look at seasonal percentage price movements of the ESTLI over the period of the spring flush shows that a 10% fall in the first month and a half of Spring is not uncommon, suggesting the ESTLI could head toward the 550¢/kg cwt level reasonably quickly once the Victorian lamb supply starts to flow. 

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