He said there appeared to be good confidence in the lamb market again with schedules in the high $6.80 (killed weight) bracket and looking to break the $7/kg mark over the winter kill, which is pleasing to see"
Mr Cotton also pointed to an anomaly in the store market.
"Why would you shear woolly store lamb? In my observation there has been only a small premium on store lambs sold shorn, but look at the cost difference."
He cited the example of a 34kg store lamb sold woolly.
The unshorn lamb weighs 1.5kg extra with the wool on so adding to the liveweight price at sale, while shearing that same store lamb costs $3.50. With the wool only fetching around $2kg and the cost of shearing factored in, farmers are on the winning end of the equation by selling unshorn.
"By my calculations farmers are making more by not shearing them and probably by as much as 20 cents a kilo."
Meanwhile, supply and demand is setting the cattle market.
"Export price has pressure on it with the higher New Zealand dollar, but this has not shown any softening in the cattle price paid in the sale yards where the lack of numbers coming forward to meet demand has seen a very solid early spring market for vendors over the past month," Mr Cotton said.
And responding to comments he made last month regarding trading terms for livestock, Mr Cotton stressed he was not attacking the integrity of fellow agents nor the companies they worked for.
"But when the tide goes out you see who's not wearing togs," Mr Cotton said.
"Last month I raised the question about whether you are an unsecured creditor when you sell store livestock. I had a couple of unexpected calls about my comments.
"One from a friend who works as a stock agent and another from a livestock manager. They were clearly upset about my comments that questioned their and their company's integrity and ability to pay.
"I apologise, I did not wish to offend them. But I do not apologise for suggesting that farmers ask the question to those they sell their livestock to. What are your of terms of trade? With high livestock prices, particularly with cattle, knowing the terms of trade and the ability of any party to pay you is just good business practice.
"As I reported last month when I asked this question of companies I deal with, there were a range of terms. With the meat companies there was again a range of terms from those that pay out proceeds in five days after kill to 7 to14 to 16 days as some companies use the day the livestock is freighted, while others the day the livestock is killed as the trigger point for payment.
"If you are drafting prime livestock every two weeks, the second load of livestock can be off the farm before you have cleared funds from the first load - this has the potential to double your financial exposure to that company.
"One livestock manager said to me that, yes, in the terms of trade with his company the company reserved the legal right to pay vendors once the purchaser has paid them, but said they always pay out.
"I asked the question that if your intention is to always pay out vendors, why don't you remove the clause giving you the legal right not to pay out until you have been paid, from your terms of trade?
"Several stock agents I talked to did not know, or had not read their own company's terms of trade when asked.
"I may be a little more cautious than salaried employees of a company as over my 28 years as an independent agent I have had to reach into my own pocket to pay vendors when things go wrong, and they do.
"It may be an uncomfortable question to ask but that does not mean it shouldn't be asked. It's all good when things are going well but it's when things go wrong that everyone runs for the rule book - it's like when the tide goes out you see who's not wearing togs."
