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Take a breather

TOP-UP SELECTION: Saffin Ker Bowen & Wilson agent Jim Oliver, Warrnambool, Victoria, and Margaret Patterson, Drysdale, Ballangeich, Vic, were looking to top-up heifer numbers at the Mount Gambier store cattle sale on Friday, after buying heifers at the Naracoorte sales held on the same day. “FROM chocolates to boiled lollies” was how one vendor described this week’s lamb sale at Dublin.

After the exhilarating highs of last week, where lambs rocketed into the stratosphere with one pen making $202, this week was understandably pedestrian with prices coming back into the more realistic region with the top price only a lowly $178.

Perception is a marvellous thing and a mystical price like $200 has raised producers” expectations beyond any reasonable level.

Feeder buyers lifted prices on store crossbred lambs to heights on Tuesday that left most reasonably-conservative onlookers gasping for breath.

Most part-time feeders would look at a $40 to $50 a head margin on a crossbred lamb as a comfortable way to make a few dollars.

The work and cost involved in shearing, drenching and feeding is not inconsiderable and the selling cost at the other end is another burden that is often forgotten when budgeting.

So to purchase crossbred lambs for a reasonable $90 to $100 and resell them for $140-$150 is good business.

When people start paying $115-$125 in the hope of returning $160-$170, the gambling really begins.

Anyone who has fed lambs will know that there is always a percentage of lambs that will not fatten at the required rate, despite all of the pampering you can provide.

Then one will die, or the flies will get a few, and broken skins will hurt your returns.

The whole exercise is fraught with pitfalls and many astute sheepmen have not made the returns that market forces so richly promised.

Then, of course there is that thing called supply-and-demand. At the moment, demand is going along, seemingly unimpeded, by the strength of the $A and the ongoing price rises, but if a major processor throws-in the towel then things could change rapidly.

Last year we saw Victorian-based processor Castricum Bros do just that, and suspend operations.

The industry cannot afford that to happen to any more of the processor sector, or the ramifications will be disastrous for those with dear lambs and a big investment in ewes at record high prices.

Noone should be too disappointed with the lamb prices this week.

It is only January and there are many months before numbers are likely to escalate.

Heavyweight lambs at $150-$170 should not be too difficult for anybody to stomach for a while.

Store cattle are attracting the same sort of attention as store lambs, with demand going through the roof.

There appears to be a different agenda for buyers of cattle, with weaner sales recording unprecedented returns for breeders.

I, for one, cannot see how steers at $800-$1000, plus freight, can be a profitable investment.

I hate talking-down the market but there seems to be a premise that export cattle prices will lift.

*Full story in Stock Journal, January 27 issue, 2011.

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