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Friday, May 15, 2015

SA lamb prices capped by strong supplies, cattle at record highs

By Augusto Semmelroth  |  Source: MLA's NLRS

Despite the recent lamb market recovery, SA continues to see stubbornly strong supplies on the back of a delayed autumn break. This has seen the state lamb indicators underperform their counterparts in NSW and Victoria, with trade lambs lagging 60-70¢ behind. Cattle markets, on the other hand, have managed to rebound strongly since late March to reach record highs.

Key points:

  • In contrast to the steady fall in lamb supplies in NSW and Victoria since mid-April, SA lamb supplies are yet to contract.
  • This has seen the price spread between eastern states prices and SA widen considerably over the last three weeks.
  • While trade lamb prices in NSW and Victoria reached 575-580¢ last week, the SA trade lamb indicator was quoted at 512¢/kg cwt, a 60-70¢ discount.
  • Other lamb categories are also much cheaper than in other eastern states, but it will only be a matter of time before prices in SA catch up if seasonal conditions improve going forward.
  • In percentile terms, SA crossbred lambs are at the 85-90th levels while in NSW/VIC they are currently around the 95th mark.
  • To a large extent, merino lambs are outperforming crossbreds, which suggests producers are starting to hold stock to start rebuilding their flocks. The same analogy applies for sheep.
  • Mutton prices are in line with Victoria and NSW, but are outperforming them in percentile terms.
  • On the cattle market front, trade steers and cows recovered remarkably in April, gaining close to 100¢, or 26-30%, during the period.
  • This puts both the SA trade steer and cow indicators at their 100th percentile. And in contrast to lambs, SA cattle finished markets are tracking at similar levels to NSW and Victoria.
  • Feeder steer prices have also rebounded strongly over the last six weeks, but at a more modest 33¢/kg lwt, or 17%, to 233¢/kg lwt. Yet, despite the weaker performance compared to trade steers and cows, they also reached a record level last week.    

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