The current stretch of prolonged dry weather, which has seen less than 50 millimetres of rain fall on a vast area of eastern Australia during the winter growing period, has had an adverse effect on saleyard sheep prices.
According to data collated by Meat & Livestock Australia’s (MLA) the supply of lighter ewes increased as the 2018 winter progressed, leading to a widening of discounts among the major mutton indicators.
MLA said that during the month of August, 37 percent of the ewes sold in NSW and Victoria weighed less than 18kg carcase weight, compared to just 16pc in August 2017. And that during July and August, when season conditions failed to respond, ewe yardings increased along with a significant rise in mutton slaughter.
Despite this considerable supply increase, mutton prices remained surprisingly strong. MLS said that on Monday, September 3rd when the eastern states mutton indicator reached 477¢/kg carcase weight (cwt), it stood 17% higher year-on-year and 35% above the five-year August average.
The service also said that during July and August, NSW and Victorian saleyards saw ewe throughput surpassed 500,000 head, which was close to double that of 2017. However, included in this figure were an increased number of drought-affected ewes that fell outside the specifications of the mutton indicator,(which includes ewes and wethers weighing between 18.1-24kg cwt in either two or three fat score condition and sold in NLRS reported saleyards in NSW, Victoria and South Australia).
As a consequence with many producers looking to offload their poorest conditioned sheep, this led to a significant divergence in the eastern states mutton indicators.
In January 2017, the eastern states mutton indicator averaged 408¢/kg cwt, while ewes less than 18kg cwt averaged 403¢/kg. In August 2018, however, the mutton indicator averaged 432¢/kg cwt, while lighter ewes averaged 361¢/kg cwt, representing an 18% discount.
The service said a simple analysis using these prices shows a 16kg cwt ewe would have made on average $66/head in August, while a 19kg cwt ewe would have sold for approximately $90/head (with an $8/head skin value).
So, a carcase weight gain of 3kg/head would earn a producer an extra $24/head at the saleyards. The trouble was that limited pasture and expensive feed made weight gains extremely hard to come by this winter and this was reflected in saleyard prices.
Elders key account manager, Ron Rutledge that the above observation by MLA may well be only the tip of iceberg.
There has been a lot of surplus sheep sold from the sheep populated areas of Riverina in particular, he said. “I don’t think I’ve seen it so bad – even in the summer months and now only September”
Farm manager have pulled a lot of levels to adjust to the deterioration conditions he said.
“Most have sold all of the surplus stock, many have quit their fellowers (lambs) and some now they are looking at selling for preservation, quitting some or all of their keeper breeding stock’.
“They’re doing what it takes to adjust to the changing conditions relative to the cost of buying feed. And for some operators the decision may be to totally destock it’s been so bad for so long in some areas he said.