AUCTIONEERS
AUCTIONEERS
COMMENT
MARKET
Guildford, Surrey
AUCTIONEER
Ashley Ward
(South East Marts)
FARMERS with store lambs bought expensively this summer should sell them as soon as possible and reinvest in more sensibly-priced ones.
Buying lambs now at, say, £36 to be sold on to the February or March market will, says Ashley Ward, give the chance of a "second bite" at profit.
"There will be no profit in many of those bought earlier this summer for £40 plus, with them only making £42 to £45 for slaughter now."
The experiences of this year highlight the importance with lamb fattening of the animals purchase price.
"Adjusting feed rates or medicine usage might shave a £ or two off cost, but most farmers have already cut outgoings to the bone. Unlike in previous seasons, I do not know of anyone who is feeding intensively. It is all grass and arable by-products."
Indeed, abundant grass supplies were the reason for the big money paid for stores earlier in the season, says Mr Ward. People were anticipating a buoyant finished trade in December, the month which in 1996 saw the "cream" of prices. Back then, £60 plus was paid for the best.
"Frustrating, then, to see how far prices have fallen back this season," he says. "But it is courting disaster to delay selling stock to try to get it heavier. Sell it as soon as it is fit and ready."
And while there is a reasonable demand for heavy lambs now – those over 45kg liveweight – this does not necessarily mean there will be in a few months time.
"The trade certainly wont be able to cope with a flood of big, over-fat sheep. As the spring progresses, there is a ready alternative in the form of New Zealand lamb.
"It offers conformity of supply and is likely to be cheap, even cheaper than in the past, because of the currency movements.
"The New Zealand product could undermine late demand for hoggets, bringing the market to an end in late March or April, rather than towards the end of May as is traditional."
Meanwhile the balance of trade shows no sign of improving. "Interest rates could go up again, and that could mean the £ sterling strengthening further."
But, on the plus side, Mr Ward doubts if there is the huge backlog of sheep on farms waiting to be sold as some people suggest.
"Flocks are continuously disappearing, too, as farmers leave the industry. There are also more non-productive units as a result of the popularity of running ewe lambs for a season without tupping them."
Mr Ward also doubts whether farmers who have taken a hit in income after the BSE crisis have, or will, turn to sheep as has been suggested.
"I cant think of one person who is keeping more sheep as a result of the BSE crisis."
For many of these beef finishers – like their counterparts in the sheep industry – there will be no margin on the stores bought earlier this year.
"Usually beef prices rise as Christmas approaches, with meat companies sourcing extra. But not this year, with buyers living hand to mouth."
Again, it was the abundant grass and by-products that held up store cattle values earlier in the summer. "Buyers from East Anglia were active in Guildford as early as July and August, taking advantage of the wet weather breaks in harvest to acquire animals."
But store prices have since fallen. While good quality Continental steers on green cards can still make £450 plus, the plain Hereford bullocks on red cards might struggle to make £200. And there are a lot of small heifers worth under £100.n