Sheep yardings going strong

Episode 3 market analyst Matt Dalgleish said last week there was a bit of spike in both sheep and lamb numbers through NSW saleyards but the averages over the past four weeks painted a steadier picture.

"In NSW yardings for sheep are probably about 70 per cent above the five year trend, so that's significant, and in Victoria sheep numbers are about 50pc above the trend, but when you look at the lamb side of thing in NSW it's only about 5pc above the five year trend," he said.

"We did see a bit of a spike in lamb numbers this week for NSW, but I think it just looks like there were some that were held back previous weeks so it's just a bit of evening out.

"For Victoria the lamb numbers are pretty much bang on the five year trend."

Mr Dalgleish said the elevated sheep yardings could be signalling that Australia's sheep production had moved into a liquidation phase, with the drier start to winter to many areas outside NSW potentially impacting some producers' decisions.

"It has been in some parts of the country quite problematic with low winter rainfall," he said.

"The other dynamic is the issues with the west with confidence around the sector more broadly, we're seeing some big volumes of turnoff there and significantly reduced joinings, people deciding to potentially exit the sector entirely.

"That could also be pushing those national numbers up as well in terms of moving us into liquidation."

The national mutton indicator got above the 300c mark in mid-May for the first time since February and was up to 382c almost a fortnight ago, but has dropped back to 336c.

Prices are currently strongest at the South Australia Livestock Exchange averaging 381c and weakest in Katanning, WA with an average price of 199c.

With a 12,785 head or 20pc contribution to the indicator, Wagga Wagga, NSW, is seeing average prices around 348c.

Mr Dalgleish said the recovery in mutton pricing could also be driving those who were looking at winding back their numbers or getting out all together to make those decisions.

"On the export side the margins are still being made in terms of processing and exporting, there's good money in that space so that's helping underpin those strong prices, so in the face of the increased supply coming forward in yarding, it hasn't damaged price," he said.

Meanwhile Mr Dalgleish said there had been sharp increase in the ratio of sheep being turned off in Western Australia.

"Some of the early surveying done when the live export decision was being formalised saw some discussion around up to 40pc or so of producers in the west getting out of the industry," he said.

"That seemed like maybe the more extreme reaction but some of the numbers coming through from the turnoff ratio levels are indicating that 40pc out of the sector could be a fair and reasonable estimation of what we're going to see.

"We've had 673,000 head that have come east since the start of the year so that's nearly rivalling the levels we saw back in 2020 after the drought in NSW when we had that big rebuild but a lot of these big numbers we've got coming across now are not coming across for rebuild, they're coming across and being slaughtered."