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Monday, February 01, 2016

NSW lamb and sheep percentiles

By Matt Dalgleish  |  Source: MLA, NLRS

Key points

  • Higher than average yarding figures in NSW are yet to flow through to softer prices for many categories of lamb and sheep.
  • Percentile tables indicate that there is some room for NSW prices to soften before supply there begins to tighten. Although, any price dip in NSW prices is expected to be short lived.
  • NSW trade and heavy lamb categories are the states “most expensive” in relative terms when compared to the national percentile figures.

2016-02-01 Sheep And Lamb Percentiles Fig1

Recent yarding figures indicate that the NSW market is the primary factor delaying the seasonal tightening in supply of sheep and lamb. Therefore, we thought it fitting to kick off our state based percentile price analysis with a focus on NSW.

Figure 1 highlights the current premium or discount to the Eastern States Trade Lamb Indicator (ESTLI) across various state categories. The green column represents the seasonal historic variation in this spread and gives and provides an indication of where the current market sits in relation to past data for the same time of year.

As the chart highlights, NSW trade and heavy lambs are testing the top of the seasonal range, re-stocker and merino lambs in NSW are within the range (re-stocker on the higher end, merino on the lower), while NSW mutton is slightly below the seasonal band.

Tables 1 and 2 provide a snapshot of the percentiles for national and NSW lamb and sheep prices, respectively. A percentile is a measure of how often, prices have been above or below a particular level. It gives a brief snapshot of whether a market has more upside or downside, and how large this may be, based on historic movements. For a more detailed explanation of how to use a percentile table click here.

The percentile table for NSW broadly follows the national pattern with current percentile figures for each category close to the national figures. It is interesting to note that the percentiles for each NSW category sit at a higher level than for the national percentiles of the same category in all types except NSW merino.

NSW merino prices have softened since last week from 483¢ to 457¢, given the higher than average lamb yarding figures for NSW it is likely that prices for the remaining categories of lamb and mutton may experience somewhat softer prices compared to similar categories in Victoria and SA in the coming weeks. Once the supply flush in NSW comes to an end we can expect local prices there to firm again in a similar fashion to what has been experienced the southern states after their supply tightened.

What does this mean?

As percentile analysis is somewhat back ward looking focusing on past price data it should always be considered in light of other evidence. Yarding figures in NSW demonstrate that supply in this region may be about to peak and need to be watched closely.

A continuation of high yarding numbers into the next few weeks could see a short term dip in prices in NSW. However, once the seasonal flush has ended in NSW prices are expected to trend higher quickly, following a similar pattern experienced in SA and Victoria earlier in the season. 

Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 

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