Monday, April 22, 2024

Store lambs close out dry summer season

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High costs meant it was never going to be a cracking season but the drier summer created some extra challenges for lamb traders and those selling store.
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The current cold snap is just another reminder that autumn is here and so too the usually more profitable winter-trade season for lamb finishers. So how have the lambs fared in the yards over summer and what climatic conditions are at play?

The current feed situation is varied across the country, but a quick look shows that Hawke’s Bay has had a good summer for the most part. North of Feilding is looking tidy now too, after a dry start, but from Feilding south it is a different story. Marlborough particularly has had a dry summer and Canterbury too has burnt off, quite literally in areas. Southland might be green, but time is limited before temperatures drop there.

With a much softer lamb schedule and uncertainty around its direction, the store lamb market has been a challenge this year. Relative to schedule, there have been some positive sales when demand has spiked due to crops coming on, but the general market has sat at expected levels. 

The average schedule across the North Island for February was $6.08/kgCW, while the average return for 30-32kg male lambs at Feilding across the month averaged $2.61/kgLW. This puts the market for these lambs at 43% of schedule, at the lower end of the typical 42-49% range going back to 2014, and well below the 57% of schedule seen at Feilding in February last year. 

Since the beginning of November 2023 and through to the end of February this year, Feilding has yarded 72,148 head of store lambs. Going back six years, this figure would have been 146,500. The last sale for February was a tough one at these yards and auctioneers were thankful to have support from Hawke’s Bay agents, but this wasn’t enough to stop a major correction in the market. 

The LivestockEye report that arrived in inboxes the evening of Friday, February 23 put the average per kilogram return at $2.30/kg, back 20c/kg from the previous sale. This put the average lamb at 30.6kg and $70.50 per head. This is just part of the drop seen since the start of February when the average return was $2.70/kg at Feilding. 

Feilding PGG Wrightson agent Tony Gallen offered several reasons for the current market. The lack of local demand stems from the drier conditions south of Feilding “where a lot of our finishing country is”. The dry has also meant that lambs haven’t done as well, and unless they are on crop the weight gains have been slow. 

Adding to this, “traders have been targeting higher weights to make up for the lower schedule and lambs just aren’t moving”, Gallen said. 

“We have been fortunate that Ohakune, Taihape and King Country have grass” Gallen said, “but numbers should flow into Feilding towards the end of March and into April depending on frosts and rain.”

For now, the hope is that demand from Hawke’s Bay continues to support the market.

In years past, there has also been interest from the South Island to absorb some of the later lambs coming out of the North Island hills. 

A conversation with PGG Wrightson regional livestock manager for Canterbury, Grant Nordstrom, confirmed that demand will be touch-and-go for a while depending on rainfall. 

“Buyers will be drawing from down south first. By the time you add cartage to a North Island lamb the price has got to be very cheap,” Nordstrom said. 

The other influencing factor is a preference for later-born options closer to home over typically earlier lambs from the North Island, due to the risk of teeth cutting earlier. Adding fuel to the fire is a drop in grass seed quotas for next year and therefore less grass going in this autumn. 

Despite all this, there have been some North Island lambs head south already and will likely be a few more.

It was never going to be a cracking season with schedules near $6.00/kgCW and high costs sticking around, but the drier summer has created some extra challenges for lamb traders and therefore those selling store. With any luck, a good rain will have fallen in the last couple of days to give grass a bit of life heading into autumn.

This article was written by AgriHQ analyst Fiona Quarrie. Subscribe to AgriHQ reports here.

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