Friday, March 29, 2024

PULSE: Price decline for ewes with LAF

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The ewes with lambs-at-foot (LAF) market has not lived up to year-ago levels, however prices haven’t been bad.
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It would seem poor scanning results because of the earlier drought will have left some farms in need of replacement stock. This could partly explain why demand for high quality offerings has been maintained, despite the softer market outlook.

In the last week, South Island vendors have been hoping to achieve $100-$110 per head all counted, but prices have landed between $90-$100p/hd all counted. 

In the North Island, good lines of ewes with LAF have been fetching between $90-$118/hd all counted, while poorer quality offerings have bottomed out at $75 all counted.

It is not uncommon for ewes with LAF to see a price drop as lambing progresses and more vendors enter the market. However, the peaks of last year were not available earlier in the season.

South Island prices last year started the season at $110-$115/hd all counted, while last year’s North Island market kicked off at $129-$134/hd all counted. By this time last year, the North Island market had eased to $110-$120/hd all counted. This year, the lower end price range has dropped below $100/hd all counted.

Past sale yard prices for ewes with LAF illustrate that this season’s prices are in no way low. Only a few years ago, today’s low price of $75/hd all counted was the average price for ewes with LAF. Based on AgriHQ sale yard data, the five-year average for ewes with LAF is $96/hd all counted, this season’s average so far is $100/hd all counted. 

So, while prices have dipped from the highs of 2018-19 by 10-13%, they are still holding up well. This signals that there are still buyers out there with the confidence to purchase new season lambs knowing future returns will be lower.

There is an evident connection between the drop in price for ewes with LAF and the drop in slaughter prices.

For the past month, the average NZ slaughter price for both ewes and lambs has been down 14-17% on last year. This means that ewes with LAF buyers stand to make less money at the processors, so have less money to spend. 

While the current lamb slaughter price is not so bad comparatively, the outlook to the end of the year – when these buyers would be potentially looking to cull the ewes and offload the lamb – is not so rosy. 

AgriHQ’s September Livestock Outlook forecasts average lamb slaughter prices in December will be under $7/kg, with further downside expected into the new year. This future uncertainty will be taking some heat out of current ewe with LAF prices.

The bottom line is, people who have always farmed for the ewes with LAF market plan – their matings and lambing around these sales – know how to achieve the best results. They turnout earlier-born, terminal sired lambs which have greater growth potential, feed efficiency and carcass quality. Additionally, the 10-13% ewe with LAF price drop is not significant when compared to the added cost of carrying ewes and lambs later into the season. 

Farmers who bred for this market and sold early will have maximised their returns while minimising the risks of selling later.

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