The price of meat is providing a silver lining for Australian growers on the back of an extended period of drought.
Lamb, sheep and cattle have been sold for record prices across the country this winter, on the back of tight supply and strong demand, particularly from overseas.
A pen of heavyweight lambs sold for a record price of $354.20 per head last month at Wagga Wagga, while at Ballarat a pen of sheep made $296 a head, setting a record for mutton.
Agent Peter Cabot, who sold the lambs at Wagga Wagga, said that the strong prices have attracted record interest from farmers looking to boost their cash flow.
“We’ve yarded more than 50,000 [weekly] for the past six weeks here,” he said.
“It’s at the absolute height it’s ever been.”
While the price of lamb tends to strengthen during winter, this season’s price peak is earlier than normal.
“If you’re to compare this year to last year, we reached $300 somewhere in that first week in August before it took off,” said Wagga Wagga livestock agent Isaac Hill.
“So we’re already at that record of 350 something dollars.”
In addition to tight supply, strong overseas demand and a weakening Australian dollar have further increased the pressure on the meat sector. Coles Supermarket has introduced a new benchmark prices contract of $10/kg for producers for spring lambs, in order to secure supply. Lamb is currently retailing in the domestic market for around $19 / kg, making a roast unaffordable for many families.
“The lamb market has never been as hot and neither has the mutton market. We’re seeing levels we’ve never seen before and trying to deal with it.”Mick Fitzsimmons – June Prime Lamb
The national sheep flock has tightened from 110 million in 2001 to 67.7 million in 2018, as graziers were forced to off load stock in the drought.
Prices for cattle have been experiencing similar growth with tight supply and strong competition from buyers.
Finished cattle in particular are attracting a premium with heavy steers attracting 39c/kg more than premium young cattle.
According to Meat and Livestock Australian senior analyst Adam Cheetham, there are a number of forces strengthening prices.
“One of those, in particular, is that demand for finished cattle. And that expectation for supplies for quality lines of finished cattle to certainly dry up over the next few months,” he said.
“Of course processors will be looking to secure more supplies through winter and into spring and that’s meant there’s been an elevated kill through the first six months of this year. So naturally there is increased competition for quality lines of finished cattle.”
Despite the strong prices, premium cattle are under represented at market, forcing many buyers to re-evaluate their expectations. A recent store sale at Mount Gambier offered 1500 head, just half the number of the previous month.
“What was interesting was that the major feedlots are actually dropping their weights. They were purchasing down to 300kg. But there were heavy steers, over 500kg, that made $3.46/kg. It was very strong,” said Andrew Whan, director of Miller, Whan and John.