July 3, 2019
THE store sheep market still hasn’t found the restocking fire to match the record prices being paid for mutton and lamb.
An overlay of the average price being paid for unjoined Merino ewes on AuctionsPlus compared to carcass rates for mutton highlights how store sheep still represent good value.
The issue was raised at Wycheproof last week when some onlookers were surprised the market didn’t have more spark, given all the talk about a sheep shortage and following reasonable rain across large swathes of southern Victoria.
“You couldn’t call this a dear market,’’ one producer said. “Based on what old sheep and lambs are making, these prices are well behind it, I think.’’
Trying to get a read on store sheep values is difficult, as there is really no regular auction that has price data collected independently that can be used to track trends over time.
AuctionsPlus is now the major trading system for store sheep, and the company’s market analyst Tom Rookyard, was able to provide three years of price results for unjoined Merino ewes sold on the internet trading platform.
The graph on this page compares the average monthly price for unjoined Merino ewes sold on AuctionsPlus since July 2016 in dollars-a-head against the national saleyard rate for mutton, expressed in cents-a-kilogram carcass weight.
The analysis shows:
STORE sheep prices are seasonal, with an obvious peak in restocking demand in spring as replacement ewes are sought ahead of joining and to match the spring growth curve;
THE market for store sheep has been a lot dearer in the past when returns for mutton, lamb and wool have not been anywhere near the combined value of today; and
THE season continues to prevent store sheep values from reaching their potential.
In dollar-a-head terms the average price paid for unjoined Merino ewes on AuctionsPlus during June was $131. During the same month the national mutton indicator averaged 575c/kg, which works out to $149.50 for a sheep with a carcass weight of 26kg (not taking into account skin or wool values).
In June last year the average price for unjoined Merino ewes was $125, compared to a mutton price of 485c/kg, which works out to a value of $126 for a 26kg sheep.
In June 2017 the average price for Merino ewes on AuctionsPlus was $133, against 506c/kg for mutton at $131 for a 26kg sheep.
So simple maths shows how store ewes are lagging behind the money currently available for old cull sheep.
And when you add in lamb prices, which this autumn and winter have been trending above 900c/kg or $200-plus for good slaughter lambs above 24kg carcass weight, replacement breeders certainly look good value on paper.
But the world doesn’t trade on paper and reality has more grey areas such as finances, feed costs, buyer confidence and seasonal variation.
Elders southern livestock manager Kevin Thompson said the potential for store sheep to make more money was certainly there.
“We have seen some limited signals of very good quality sheep getting dearer, but the store market hasn’t been able to settle into any sort of regular pattern,’’ he said.
“I think, based on the flow of money from lamb, wool and mutton, the market can get stronger but when this could happen is the question.’’
NSW remains a key piece of the puzzle, as the fragile season in this state continues to push out decent numbers of sheep as producers remain wary of carrying stock through another potentially tough spring and summer.
A decent widespread rain across NSW that slashed sheep supply would be the biggest game-changer in regards to store sheep prices.
The other issue is finance, and while there is a big focus on what money is currently out there for sheep and lambs, the reality is a lot of people have sold stock for a lot less in the past year or so.
Mr Thompson said the ability of restockers to fund replacement sheep was a genuine concern.
“If you’ve got feed but no sheep (to trade) and little money in the bank, it becomes restrictive when you are looking at $180 to $200 for a good young bare-shorn ewe,’’ he said.
To put costs in context, the top price at Wycheproof last week was $378 for 149 young first-cross ewes that had 150 good little sucker lambs. On paper they probably represented the best buying, but the outfits required an outlay of $56,000 before add-on costs (such as transport, GST, etc).
The best young joined Merino ewes made $250 for a pen of 292, for an investment of $73,000 before costs.
Delving further into Wycheproof, there were signs of standout sheep making a premium and with the major special store sheep sales set to start in August and September there is no doubt higher prices will be seen for feature lots.
This article originally appeared in The Weekly Times.