Summer is upon us but you wouldn’t know it with the cool changes that are still coming through. The good thing the wet Spring has done is give a controlled flow of livestock into our markets. Both cattle and sheep sales have only seen one week with excessive numbers that had an adverse effect on prices.
Sheep and lambs have been able to hold reasonable rates as numbers have been on the lower side of the averages for this time of year. We have also seen the wet Spring hold off the grass seed issues this time of year. The good finish to Spring has enabled many producers to continue to sell off lambs prior to be shorn. The question that has been put out there is “How will this extended selling season affect our numbers of shorn lambs for later in the year or early 2017?” Traditionally by this time we have seen a dramatic drop off in rates due to dryness and numbers. Earlier in the year the forward contract rates for this time were approximately $1.00/kg below current rates.
There are many factors currently affecting where our market is and where it may go. For what it is worth, I believe lower numbers will continue to keep a firm market with only slight changes dependent on weather and supply numbers. Cattle have seen our local numbers starting to come back as our market has eased. The market is still well above average rates. I attended a meeting in Sydney with Richard Norton, CEO of MLA. It was interesting to hear his views on where our cattle market is heading. In his opinion, the global market has signs of oversupply and price pressure but we are insulated slightly by the current low Australian herd numbers. Our current market possibly could see up to a 20% correction. It sounds like a big fall but we would still be at very good levels.
It must be said that store markets for lambs, ewes and cattle are still very strong and this may have the effect of limiting numbers as our best young replacement stock are so hard to purchase. In conclusion, I believe we can see price corrections and still have a good year ahead for livestock.
By Geoff Rice