Livestock with Iain Hyndman: Prices enter unprecedented territory

Instead of a bull run, David Cotton is calling the buoyant lamb market a 'lamb run'. Photos / File

Top lambs break $200 a head at recent sale.

The sheep market is entering unprecedented territory with prices higher than they have been in living memory.

"In sharemarket terms they call it a 'bull run' when the stars align," independent Whanganui livestock trader and commentator David Cotton said.

"So what we are experiencing must be a 'lamb run' and I cannot recall a more buoyant market than what we have at the moment. Each week I keep saying it can't get any better, but then it does.

"The contract (schedule) prices have remained around $9/kg, but the store market is breaking new records again with the very best 48kg male lambs cracking $200 a head at Feilding last Friday. Even the tailenders at 24kg are selling for over $120 a head."

About 2008/09 Federated Farmers announced its ambitious "T150" goal, targeting $150 for an average mid-season lamb by the 2013/14 season.

Farmers' average lamb price was $56 per head and the sheep farming industry was in the doldrums. T150 was launched because the federation recognised unsustainable low farm-gate meat and wool prices, combined with other pressures, had resulted in many farmers struggling to see any future in raising sheep.

Not all in the industry agreed at the time, but the federation's confidence in the sector has proved justified. Since 2008, the average lamb meat price, as reported by Beef + Lamb New Zealand, had risen steadily: $81 in 2009/10, $116 in 2010/11 and an estimated $125, at an exchange rate of US$0.71, for the 2011/12 season.

Many farmers had already sold numbers of "T150" lambs by 2013, albeit early in the season. Remember while the T150 target was a stationary one, farm costs continued to increase. As Winston Churchill said, "This is not the end. It is not even the beginning of the end, but it is, perhaps, the end of the beginning."

And so it proved to be. Despite the odd hiccup we have now arrived at prices that are not only high, but sustainable.

"Prices are even way better than what was envisaged during the T150 era and the lamb job is on an absolute run. In-lamb ewes also continue to sell well, underpinned by a $5.40/kg price, that was lamb territory a few years ago," Cotton said.

"It looks sustainable too, especially with China in the market and also buying a lot of our mutton."

However, the good news message comes with a warning for finishers at this time of year.

"The time is starting to tick with talk of two teeth coming up when lambs will be graded as mutton. Those buying store lambs aiming to finish them should be aware returns will be lower once they cut their two teeth and are graded as mutton.

"New season lambs are already hitting the ground in numbers. The seasons roll round quickly and it won't be long before the plough will be making it out of the shed to start the green feed and cash crop cycle.

"All the signs are for another great sheep season, we just need the weather gods to play their part."

Meanwhile, the good times also continue to roll in the cattle markets.

"My earlier reports suggested cattle were good buying, especially yearlings, heifers and bulls. There has been a good lift in the killing price, up from a low of $5/kg to just on $6/kg," Cotton said.