Late last year I outlined why lamb prices were struggling.
Since mid December 2012 we have seen a 60 to 70c/kg improvement in most lamb categories despite much of our region remaining dry.
I expect further improvements within the approaching few weeks as kill space in abattoirs improve, Easter approaches, skin values continue to improve and supply and demand patterns return to some normality.
One interesting aspect of recent price improvements has been ‘heavy’ lamb categories outperforming the ‘trade’ lamb category on a cents/kg basis.
Historically this only happens occasionally and usually for short (two to four week) periods.
Since 2008 trade lambs have averaged 13c/kg more than heavy lambs, with a peak difference last year when trades averaged 61 c/kg more across the year.
The 2013 values, however, see trade lambs averaging 17c/kgHSCWless – a trend since October 2012.
Why? The likely answer is that over recent years exporters have focused more on ‘lighter’ carcass markets such as the Middle East, are now sourcing more of the ‘heavier’ end trade lambs for traditional export markets and seasonal conditions had, until recently, allowed lambs to be taken through to heavier weights.
I’d also suggest that industry, as a whole, has now decided that big is not necessarily better both in terms of breeding stock and lamb weights and the current heavy lamb price advantage is due to lack of numbers and seasonal conditions more so than a swing towards traditional export categories in the long term.
What to make of the struggling mutton market?
The National Mutton Market Indicator has staged a mini revival in recent weeks after trending downwards since August 2012.
Why had the market dropped so far and so quickly? What are likely price trends in coming months?
Do you sell now or carry numbers through?
If we look at historical trends in terms of mutton slaughter patterns mutton numbers generally increase from July through to a December peak, with a corresponding decline in price. Conversely, and as we see with the lamb industry reduced mutton supply approaching winter months usually see an improvement insaleyardvalues .
Since 1996 mutton has averaged around 175c/kg – slightly higher than current values.
Prices since 2006 however, including the 400+c/kg prices received during 2010/11, have pushed the short term average closer to 270c/kg.
So although current prices are close to long term averages they are still 100c/kg below short term (five to six year) averages.
Unfortunately, as with the lamb market, we have seen major corrections in mutton values following several prosperous years.
So when to sell?
Historically producers have received between 10 to 25 per cent less (compared to the 12 monthly mutton average) between the months of September through to March.
Producers therefore are currently trading within a traditionally low price trough. Given that we are likely to see the clearing of the current mutton supply backlog, likely improvements in mutton values, continued improvements in the skin and wool market segments.
Also a tightening of lamb supply will see some processors focus on increased mutton kills it may therefore be worthwhile retaining and supplementing orfeedlottingthose animals in better condition and/or carrying a reasonable jacket.
Geoff Duddy from NSW DPI
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