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Friday, May 15, 2015

Poor seasonal conditions weigh on Tasmanian sheepmeat markets

By Augusto Semmelroth  |  Source: MLA's NLRS

Since the start of April, Tasmanian lamb markets moved from being at a premium to a discount to their mainland counterparts. Tasmanian markets are likely to lag behind the mainland in late May and June on the back of a seasonal increase in supply. However, firmer prices in Victoria and NSW will support Tasmanian markets in the short-term.

Key points:

  • Tasmanian trade lamb prices eased 45¢ to 526¢/kg cwt in the two weeks to 8 May as supplies increase and place downward pressure on prices.
  • This has seen the TAS trade lamb indicator move from a 20¢ premium to the Eastern States Trade Lamb Indicator (ESTLI) in late April to a 50¢ discount last week as eastern markets finally made a move.
  • Despite the expected seasonal increase in lamb throughput in June and July, Tasmanian lamb markets will likely find support from firmer prices in the east coast as numbers dwindle there.
  • Although discounts to the ESTLI could remain around the 25-50¢ mark, eastern markets are most likely to move beyond the 600¢/kg cwt mark in the short-term. This will support Tasmanian trade lambs at around 550¢/kg cwt in the next couple of months.
  • Improved seasonal conditions will also play an important role in Tasmania, balancing supplies and making sure prices don’t move to a greater discount to the mainland.
  • In percentile terms, the trade and heavy lamb indicators remain just below their 90th percentile levels while in the east there are around the 95th mark already.
  • The poor seasonal conditions seen since the start of the year is taking its toll at the lighter end of the lambs sold at the yards, with supplies strong and quality an issue.
  • As a result, the Tasmanian light lamb indicator continues to track at a solid discount to trade and heavy lambs. In percentile terms, they were quoted below the 70th level last week, but once rainfall conditions improve they should move back in line with other categories.
  • Mutton markets have also lost some ground in the last two weeks but remain at their 86th percentile. Tasmanian mutton markets are likely to rebound when/if seasonal conditions improve, as flock rebuild intentions will translate into tighter supplies in the short to medium term.

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