The yards covered by the AgriHQ LivestockEye reports – Temuka, Canterbury Park and Coalgate – are typically a popular outlet for prime lambs, and until lockdown this year throughput through these yards was 5% higher than 2019. Although there was a slight increase in volume at the first post-lockdown sales, volume since then has realigned with last year.
That lack of significant volume is creating a strong procurement competition between processors as the South Island lamb supply hit record lows a few weeks back.
Sellers are, therefore, opting to take the sale yard route as premiums can often be made from the increased competition provided by multiple buyers needing to fill contracts. It is also one of the few outlets for the oversized lambs that would incur penalties if sent directly to the processors.
The median lamb price paid at these centres has hovered around the $150 mark in August thus far, with the Temuka sale on August 17 reaching all the way to $167.
The mild 2020 winter may be impacting these values by allowing lambs offered to have higher yield potential, especially if they were held on the property for longer than usual as a result of lockdown.
While the current August prices are $5-$10 higher than the five-year average, they have started a more restricted curve upwards than usual as the number of old-season lambs dwindles.
The median price each week has also been tracking higher than usual for this time of year, but prices for the heaviest pens during August have lagged significantly behind previous years.
Only one pen so far in August, at Coalgate on the 14th, has been able to reach $200.
During 2019, this level was reliably hit each week from the end of May through to the final week of December.
In contrast, during 2020 prices of $200 or above have only been achieved at a third of the sales since May and usually only by a handful of pens.
This reflects the lack of export markets that processors have for heavy lamb cuts – heavy lambs are only desirable to keep plant throughput up (i.e. to cover fixed plant costs) – so buyers are motivated to avoid these if other options are available.
At current auction prices, margins are tight for processors and they will be looking to reduce the rates they pay as much as they can in the short term.
That will see downwards pressure applied to prices promptly if they can secure enough supply. With this in mind, any prime lambs should be making a trip to the sale sooner rather than later, particularly as heavier carcass weights will become a problem for processors as production begins for the Christmas trade, whose specifications reward a lighter framed animal.
