Flocking to the premiums

Livestock | 15th February 2021 | By Matt Dalgleish

The Snapshot

  • Sale yard to over-the-hooks grid pricing for Victorian lambs shows that premium spreads have risen to levels unseen in over a decade, encouraging producers to present very much above average volumes of lambs to the sale yards.
  • Victorian Light lambs have been averaging¬† premiums of 18.5% at the saleyard compared to OTH prices since the start of 2021, well above the 1.6% premiums achieved normally achieved at this time in the year according to the ten-year average trend.
  • Victorian Trade Lambs have been achieving average weekly premium spreads of 11.2% for the first six weeks in the year, compared to the ten-year seasonal average of just 0.8% premium and Victorian Heavy Lambs have recorded an average weekly price spread of a 9.6% premium, compared to the 1.1% premium highlighted by the ten-year average pattern.

The Detail

In a article published on the 10th February we noted the strong surge in Victorian lamb throughput figures in recent weeks and an experienced Western districts lamb producer and subscriber to the TEM service got in touch to suggest that the very strong prices available at the saleyard, when compared to the over-the hooks (OTH) grids, were encouraging more volumes to the sale yards.

Analysis of the spread of saleyard to OTH prices in Victoria for light, trade and heavy lambs shows a definite trend towards the saleyard achieving increased premiums during 2021. Indeed, the pattern outlined by the 52 week rolling average spread shows that levels are being achieved that haven’t been seen in more than a decade.

Light lambs in Victoria have been averaging weekly price spread premiums of 18.5% at the saleyard compared to OTH prices since the start of 2021. The ten-year average spread for this time in the year usually sits around a 1.6% premium.

Victorian Trade Lambs have been achieving average weekly premium spreads of 11.2% for the first six weeks in the year, compared to the ten-year seasonal average of just 0.8% premium. Meanwhile the Victorian Heavy Lamb spread premium for saleyard to OTH prices has recorded an average weekly price spread of a 9.6% premium, compared to the 1.1% spread premium that has been achieved, on average, for this time in the season over the last decade.

For all three lamb categories the premium spreads being achieved has been above the range that would be considered to be “normal” for this time in the season. This is especially true for light lambs, with the favourable climatic conditions and strong restocking activity helping to push the saleyard prices to very strong levels in comparison to the OTH grids.

Tags

  • Lamb
  • Throughput
  • Spreads