WHO would have thought during the Christmas break that march would bring lamb prices knocking on the door of $200 a head and about $6 a kilogram.
I know very well that all of the projections from MLA experts, who by the way get things right more often than not, pointed to solid gains in lamb prices for the first half of 2014. But, even taking historical precedents into account, the price gains made have made heads spin and certainly made vendors very happy.
The speed of the price escalation has caught many agents, auctioneers, producers and even buyers off guard.
This may sound a bit silly, but the buyers as a group are generally a fairly tight-knit group and collectively seem to be a bit shell-shocked with the way things have developed.
They all face the same pressures to deliver the article to the abattoir within the parameters set by their lords and masters. This seemingly simple task has been an almost impossible dream as the necessity to fill slaughter space overrides any thought that it would be better not to operate than pay ridiculously high prices.
One buyer rather succinctly described his particular company's abattoir as a big, hungry machine that needs fuel to keep it churning away, so buy and be damned but they must buy.
Unfortunately, it is notoriously difficult to glean any specific information from meat companies.
We outsiders who are involved with the basic commodity are left to ponder how the processors can suddenly afford to pay these prices.
Presumably those who supply the domestic market simply pass on the extra cost and this in turn is passed along the chain until consumers notice their grocery bill has risen substantially and they change their buying habits to exclude or reduce lamb, probably sooner rather than later.
What happens to the exporters is the great mystery to me and most producers I have ever spoken to.
Presumably processors have contracts to supply lamb to their overseas clientele, whether it be portions, cuts or carcase.
I would be surprised if these contracts had any allowance in them for rising prices - that would be a ridiculous arrangement to enter into if you were the buyer, so I can't imagine there would be that sort of leeway involved.
So, processors must have a negotiated price on these contracts with a fair degree of comfort built in so that price variations have negligible effects on their survival.
It is little wonder that meat companies have come and gone with great regularity in the past 40 years that I have seen. Imagine negotiating an iron-clad contract with a foreign government or trader when you do not know for sure how much the product you are selling is going to cost as raw material.
* Full report in Stock Journal, March 6, 2014 issue.
