Buyer demand is usually at its lowest then, a reflection of usual summer feed conditions and a lack of desire to build stocking rates.
From there in the North Island, buyers step into the market again in April-May before prices plateau through winter with a final spike in demand through September.
In the South Island store lamb prices tend to slowly edge higher through autumn and winter before peaking in September.
There are many factors to take into consideration and these vary from farm to farm. But there is a correlation between store lambs and schedule prices that is worth making note of, especially when buying store lambs.
There are clear signs for both islands that at two particular times of the season, store lamb prices will be more expensive relative to schedule prices.
Buyer demand picks up through April and early May, then again through August and September making store lamb prices more expensive relative to schedules.
Margins on lambs when killed are likely to be reduced given the higher outlay at the start.
In April, the main drivers are winter traders starting to raise onfarm numbers and cropping farmers looking for lambs to graze new grass.
In some regions, prices are pushed higher by strong demand from horticulturists or grazers looking for lambs to tidy orchards and vineyards.
Typically these buyers aren’t too concerned about the cents/kg price of the lamb. They have a per-head price and number in mind so buy to those requirements.
Often the traditional sheep farmer has to compete with these buyers and typically prices lift on the back of overall demand regardless of farmer operating prices at the time.
In the North Island, on average, 35kg store lamb prices typically trade at 46-47% of schedule in April and May respectively, compared to 43% in March and 45% in June.
This year store lamb buyers in April were paying 48% of schedule, 10c/kg or more than $3/head more than normal.
In April, farmer operating prices for lamb averaged just over $4.90/kg and the outlook was not overly promising for prices through winter.
In a very broad sense, the most expensive time to buy store lambs either on a cents-per-kilogram basis or relative to schedule is in September.
Store lamb prices became cheaper through May because many regions were affected by ongoing dry conditions and limited grass growth.
During this mid-autumn period it seems there is less concern where slaughter prices will be when lambs reach finishing weights and it is more about securing stock to graze pastures.
Store lamb prices generally rise through winter, buoyed by increasing farmer operating prices. The correlation between store and slaughter prices tends to get a little skewed through September as extra demand comes on.
Typically, finishers or traders, where they can, opt for one last trade before lambs start cutting their teeth and become hoggets.
It is a very tight window of opportunity but as demand picks up and store numbers are generally in decline, store lambs once again become more expensive relative to schedules.
Underpinning this is the expectation farmer operating prices will continue to lift into October as processors secure lambs for chilled export, offsetting the higher price paid to secure the store lambs.
Demand for store lambs this winter, in the paddock and saleyards, has outpaced upward movements in farmer operating prices, so buyers have paid more than normal to secure lambs.
Numbers through some saleyards have also been higher this winter yet this has failed to dent demand.
Part of the reason for increased volumes was the earlier uncertainty around spring schedules which meant many opted to offload on a strong store market rather than try and finish to slaughter.
In the North Island buyers targeted 28kg-liveweight male lambs through July and were prepared to pay 30c/kg or more than $8/head more than normal relative to July schedule prices.
In the South Island, tighter lamb availability has seen store lambs trading at a premium relative to the position of schedules.
Store prices as a percentage of schedule have been overvalued since early this year so buyers have had to pay more to secure lambs therefore eating into margins at processing.
Relative to schedule, store lamb prices peaked in July 20-30c/kg overvalued.
It is a gamble and that extra money paid for those lambs is only going to erode margins at processing time unless they are taken to heavier weights to offset some of the earlier outlay.
In a very broad sense, the most expensive time to buy store lambs either on a cents-per-kilogram basis or relative to schedule is in September.
These prices are underpinned by traders looking for one last trade and to cash-in on the lucrative Christmas market.
There are only a very few that would look at this option as it does not often fit into many farming policies.
From there as the new season gets under way, store lamb prices will reflect the seasonal decline in farmer operating prices.
The correlation between store and slaughter prices finds its lowest point between December and March.
This is typically when farmer operating prices are at their low point and this is reflected in lower store prices and a general lack of demand because of usual summer conditions.
While farmer operating prices for lamb are expected to push over the $6/kg carcaseweight mark through October, it comes with a warning – don’t expect it to hold on.
Christmas chilled demand has yet to be determined and with procurement underpinning farmgate prices now, as slaughter rates seasonally lift from mid-November, expect prices to come back.
This will impact the store lamb market. For farmers still under-stocked and who can make it work, store lambs might be a favourable option to consider through late spring and into summer given the smaller outlay through that period.
