IT IS not time to panic however the slowdown in export demand for lambs has had the effect of stalling any upward price swing for heavy lambs during this traditionally dearer price cycle.
This declaration flies in the face of lamb exports increasing 12 per cent year-on-year to 19,860 tonnes for April, taking the calendar year total to 78,457t.
There is a certain amount of conflict in official data, and anecdotal information received from meat buyers in the paddock and at saleyards.
Before anybody starts to accuse me of being naive, I am well aware that buyers will try and manipulate the system to allow them to buy stock at the cheapest possible price, however it is only seldom that every export operator and their buyers seem to concur.
According to buyers, product is difficult to shift and they have chillers and freezers full of lamb which allows them to dictate prices rather than in recent years when supply seemed to have trouble matching demand.
It's bad enough being confused about the differential between official figures and processor claims when one of the major players makes some dramatic changes to their lamb operation concerns because of supply.
JB Swift stopped its lamb kill at its Brooklyn, Vic, works and dropped a much vaunted extra shift at its Bordertown establishment, citing weak international demand and uncertainty surrounding supply as the reasons for the decisions.
For me, this seems a bit contradictory.
I can't understand why, if export demand is so weak, there should be little need to have an on-hooks price of $5.40 a kilogram, why not $5/kg or $4.50/kg?
If sales of export lamb are going slowly I would have thought processors would honour their forward contracts, then for the rest wind the price back to the cheapest point possible.
I am aware that processors need to keep production at certain levels to retain their workforce, however the price they are paying doesn't have to be $1/kg in excess of what they will pay for new season lambs in spring.
Maybe it's a reflection of their magnanimous nature, but I doubt it.
Thomas Foods International is having its traditional maintenance closures at Lobethal and Murray Bridge.
Lobethal closes at the end of May and the Murray Bridge closure takes effect through June and July.
This is significant for SA producers, especially in light of recent JBS manoeuvres.
There is little doubt that TFI has managed its supply chain very well.
Its forward contract regime has been an unqualified success despite a lot of scepticism throughout the industry (myself included) in the past couple of years.
It has obviously been able to manage its kill effectively and after the resumption of work from maintenance, will have a ready source of product available.
The surprising aspect of the past couple of months in the lamb market has been the burgeoning strength of domestic traders.
Prices for crossbred lambs, from 18kg to 24kg, have been the lone commodity that has improved.
Generally regarded as small players in the grand scheme of the industry in comparison to exporters, operators such as Austral, Holco, Frew, Specialty and MC Herd, along with supermarket demand, have switched many producers' focus from producing the heaviest lambs possible to producing a quality tradeweight lamb for the domestic market.
So roll on spring.
We will find out then whether or not the dearth of sales overseas is real or illusory.
My money is on the latter!
