Lamb proves standout, while pig prices plummet

LYNDAL READING, The Weekly Times January 2, 2018

LAMB prices are tracking about 40 per cent higher than this time last year, while pig prices have plummeted.

Rabobank senior animal proteins analyst Angus Gidley-Baird said lamb had been the standout meat when tracked against pork and beef for saleyard prices in 2017.

He said the Eastern States Trade Lamb Indicator was tracking at 660c/kg for mid-December 2017 in comparison to 498c/kg for mid-December 2016.

The price rise was a combination of fewer lambs available and demand from China increasing this year.

Mr Gidley-Baird said restockers and light trade lambs were performing the best, reflecting improved seasonal conditions where processors were competing with farmers over limited supplies.

“With wet conditions in 2016 people held on to stock and those are coming on line now for production,” he said.

Mr Gidley-Baird said consumer lamb prices tended to peak midyear when supply was short, drop in spring when the flush of lambs came on to the market and pick up in December due to Australia Day promotions.

However, he said retail prices were fairly flat in comparison to saleyard prices, having only lifted 1 per cent.

The Meat Market owner, Richard Gunner, from Adelaide, said demand had increased the price of lamb — on average about $16.50kg — but Australian lamb was considered the best in the world.

“The farmers deserve the price they get and consumers for the most part are happy to pay for such a good product,” he said.

“We’re expecting to sell heaps of lamb on Australia Day.”

Mr Gidley-Baird said the beef herd was rebuilding at the moment so there was demand for young cattle from restockers.

“The trend for 2017 has been inverse to 2016,” he said.

“The Eastern Young Cattle Indicator started 2016 at 600c/kg then started to dip in May, then began to pick up and we had wet weather mid-year in NSW, Queensland and Victoria, which was a drought saver and we saw a lot of buying activity. The price reached 700c/kg in August (2016).”

It was back to 634c/kg by mid-December 2016.

Mr Gidley-Baird said the price last year started at 650c/kg then was eroded by a dry winter.

“Some places recorded their driest winter on record and some were thinking ‘I’ve got no feed in the bank’,” he said.

Prices dropped to almost 500c/kg in September then picked up to 569c/kg by mid-December.

According to Rural Bank the EYCI average for the past five years was 468c/kg.

Pork saleyard prices dropped the most of any of the animal proteins during the past 12 months, falling from 390c/kg in December 2016 to 270-290c/kg last month.

“There was a fire in a Queensland boning room and that reduced capacity just before Christmas in 2016,” Mr Gidley-Baird said.

“Plus production has been growing for the past five years and prices had been improving but it reached that tipping point.”

There was also some competition from pre-prepared pork imports.

He said the prices started dropping then stabilised in the second part of the year.

“The question is, does the industry have the ability to correct the fall in prices by reducing supply or is this going to be a more protracted slump?”

Chicken prices remained “low forever and a day” with prices similar to last year.

Mr Gidley-Baird said while farmgate prices weren’t available for chicken, the retail price was 531c/kg for the third quarter of the year, about the same as 2016. In comparison beef was 1928c/kg for the third quarter; lamb 1495c/kg; and pork 1170c/kg.