PRODUCERS are weighing up their “keep or kill” options with their older sheep to best capitalise on the burgeoning mutton and lamb markets.

This has resulted in a reduction of the number of restocker sheep numbers at sales across the country and increased competition from processors looking to secure mutton.

According to Meat and Livestock Australia’s (MLA) National Livestock Reporting Service (NLRS) the mutton indicator has hit its highest point since last July, reaching 357c a kilogram carcase weight (cwt) last week.

Statistics from MLA show the sheep slaughter for 2015 so far is back 25 per cent year-on-year for the January period, at 123,485 head per week, following what was the second consecutive year of over nine million head of sheep slaughtered.

MLA anticipated the relatively strong lamb prices of 2014 would continue into 2015, which would likely result in a dramatic year-on-year drop in sheep slaughter as the year progressed, as producers aim to maximise lamb production- albeit dependent on seasonal conditions.

Punters have tipped the mutton indicator will continue to rise as supply was anticipated to slow.

Meat market bolstering wool enterprisesIn the NSW market, Landmark Bombala livestock manager Justin Lewis said numbers at the Bombala district circuit sale were back about 6000 head last Wednesday, compared to the usual 17,000 to 18,000 surplus ewes and wethers that were usually offered at the sale.

“We had 11,430 sheep, which was well back on usual because the season has been so good,” Mr Lewis said.

He said a couple of the sales regular vendors had bought more land elsewhere in the last 12 months and had held onto to surplus sheep to stock those properties.

Mr Lewis said processors were at the sale but hardly got a look-in due to strong restocker demand.

“The processors could only buy about 500, seven-and-a-half year old ewes as the restockers didn’t want those,” he said.

Mr Lewis said ewe numbers in the Bombala district had remained static for at least four years now due to the run of good seasons and producers were trying to hold onto as many stock as possible.

Local restocker competition was also bolstered by the district receiving 35 millimetres of rain in the 10 days leading up to the sale, as did the reduced yarding contribute to very solid prices for both ewes and wethers.

Four-and-half year old Merino ewes topped $143, five-and-a-half year old ewes sold to $130 and six-and-a-half year old Merino ewes sold for $106.

Mr Lewis said older ewes and wethers sold by clients direct to the processor over the last month had returned a solid $80 average.

He said there was no doubt the meat side of the sheep job was holding up wool enterprises at present.

Strong restocker competitionWhilst the availability of older sheep was tightening, Thomas Foods International (TFI) livestock manager, Paul Leonard, Murray Bridge, South Australia, said TFI was currently processing its usual number of sheep at present – 5000 sheep a day at Murray Bridge and 3000 a day at Wollongarra, Queensland.

He said there was strong restocker competition in the yards.

“Restockers are even competing for seven-and-a-half year old sheep as the five-and-a-half year old and six-and-a-half year old sheep are not in the market as people are holding onto them,” he said.

However, Mr Leonard said he would much rather producers hold onto their older sheep and breed on with them than exit the sheep and lamb industry.

“Ultimately lamb is our main product as mutton is a by-product, so the more ewes producers are keeping the more lambs they are producing,” he said.

Mr Leonard said TFI were currently meeting the requirements of their international mutton markets.

“We aren’t going to run out of sheep, as sheep numbers recover so quickly, especially is these periods when people hold onto them numbers rebuild fast,” Mr Leonard said.

Mr Leonard anticipated mutton prices would remain consistently strong for the next three years- with the mutton price currently about 40pc higher than it was at this same time last year.

“Both mutton and lamb will be at a premium for the next two to three years,” he said.

“Demand from China and India for agricultural protein will also auger well for the mutton and lamb industry.”

Ewes in demandBarellan livestock agent, Mark Flagg, Flagg Livestock and Property, anticipated there could be a premium paid for scanned-in-lamb (SIL) first cross ewes at the annual Barellan first cross ewe today.

Mr Flagg said buying the SIL units was a good opportunity for restockers to replenish their ewe flocks and also make a speedy return on investment from the buoyant lamb market.

He expected local restockers would be competitive at the sale as there was a lot of lucerne feed about the district at the moment as they had received above average summer rainfall.

Mr Flagg, who also operates as a selling agent at the Griffith prime sale, expected the sale would be firmer than last year and ewe prices would make between $170 and $250. He expected Merino ewe numbers, suitable for the mutton trade, would dwindle.

“Traditionally ewe numbers ease as we move into winter and I expect this year we should see the mutton price kick on as we struggle to get the older Merino ewe number through,” he said.

GJ Hulm livestock agent, Isaac Hill, Wagga Wagga, said sheep numbers were holding consistent week-on-week at the Wagga prime market at the moment, but mutton numbers were a lot lower compared to other years at this time.

He said 95 per cent of the sheep at Wagga yards were bought by processors at the moment.

“There is a real even spread between the processors taking mutton, which is unusual, normally there is one processor in particular that is firing,” Mr Hill said.

“I think processors have adequate supply at the moment, but by the end of March they will have to compete a lot harder as supply tapers off,” he said.

Presently 7000 to 11,000 sheep were yarded weekly at Wagga.

Mr Hill said producers were happy with the money their surplus caste-for-age ewes were returning.

“The mutton market has been very good for 18 months to two years, while we have seen it dearer; it’s pretty solid with where it is just at the moment.”

Rain boosts stock conditionQuality wise, Mr Hill said the sheep couldn’t be in better condition as they had come off stubbles or summer grasses that had benefited from recent rain.

He said some producers had also opted to hold onto their older ewes for another year to get an extra lamb out of while lamb prices were solid.

Quade Moncrieff Livestock and Property director, Paul Quade, West Wyalong, said processors were forced to compete with strong restocker demand for older at the West Wyalong store sheep sale this week as there was plentiful supply of feed across the region.

“A lot of local producers received 100mm of rain in January – we usually get 20mm of rain in January – so many were looking to utilise the feed they have with some extra stock,” he said.

He said for that reason, good summer rain, a few vendors have opted to hold onto their stock.

Most of the 8000 sheep offered were in good condition as they had been on lucerne and quality summer grasses.

Mr Quade said some producers had already sold suitable older sheep at prime sales at Wagga, Forbes and Griffith, as well as direct to the processor in the last fortnight.

A client received $90 to $100 for six-and-a-half year old Merino ewes at Griffith and another client bagged $122 for three-year-old Merino wethers they sold to processor Fletcher’s International at Dubbo.

“I expected a strong market on sale day given how strong slaughter prices are,” Mr Quade said.

Butt Livestock and Property director, Phil Butt, Yass, said due to the strong mutton price there would be far less six-and-a-half year old and seven-and-a-half year old Merino ewes in the Yass circuit sale today.

“A lot of producers have been selling their older ewe over the last 12 months as the mutton slaughter price has been strong,” he said.

Mr Butt said the ewe shortage was not just limited to the mutton market.

“I think there will be a shortage of ewes in general on the market this year and this is already happening in the mutton market,” he said.

He producers in the Yass district weren’t holding onto surplus breeders and were operating their usual turnover programs.

Mr Butt expected prices for older ewes to be double that of last year’s sale at this time.

“For the past two years older ewes have been making about $65 at this sale, but I think to secure ewes people will have to be prepared a higher price – double last year’s prices,” he said.

Mr Butt said the Yass district has experienced a good 12 months seasonally and sheep would be 7-8kg heavier than this time last year.

He said 95pc of one-year-old ewes were at joinable weights, whereas they weren’t at that level last year.

There will be 7700 sheep offered at the sale, back on the 9000 head offered last year, mainly due to producers already selling Merino wethers direct to the processor or holding onto them.

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