Interstate movements
Since August 2016 there has been an abnormally high number of sheep and lambs being transported from WA to the Eastern States. These sheep are a combination of sheep going to slaughter and being used for restocking purposes.
In August 25 000 total sheep and lambs moved east from WA which was an increase of 219% compared to the 8000 that were transported east in July. Numbers appeared to have peaked in October at over 78 000 for the month but were still high in the first half of November reaching 22 000.
Between January and mid-November 2016, 189 000 total sheep and lambs had been moved east from WA. This is up 108% from 91 000 in 2015. It is shaping up to be a similar year to 2013 when 195 000 sheep went east but doesn’t compare to 2010 or 2011 when sheep and lambs totalling 1.02 million and 417 000 went east respectively (Figure 3).
The large number of sheep and lambs moving east is in part due to price differences between sheep sold in Eastern and Western Australia. As seen below in Figure 4 there has been a large price difference in the mutton sale yard indicator between Victoria and WA between early 2015 and October 2016. The difference in the mutton indicators has ranged between 61 c/kg cwt and 127 c/kg cwt during 2016. A price difference of 127 c/kg as experienced in October, equates to a difference of $30.48 per head for a 24 kg animal.
The price of heavy lambs in Victoria has been higher than that found in WA saleyards since August 2014; however the margin has greatly increased during 2016. During 2016 the WA indicator has moved between being 35 c/kg cwt less than Victoria in February and 173 c/kg cwt less in July 2016. In October the average for WA was 412 c/kg cwt and 551.25 c/kg cwt for Victoria- a difference of 139.25 c/kg cwt or $33.42 per head for a 24kg cwt animal.
In a similar fashion to that of the heavy lambs, the trade lamb saleyard indicator has also been much higher in the Eastern States than in WA. During 2016 the trade lamb indicator has been between 44 c/kg cwt and 144 c/kg cwt less than that seen in the East. A price difference of this magnitude has not been seen in the last 10 years.
The margin between Victorian and WA saleyard indicators for Merino lambs has also widened during 2016. In previous years WA has at times had a higher price for Merino lambs; however during October the WA indicator was 437 c/kg cwt, 77 c/kg less than the Victorian counterpart. This was an improvement on September when the difference was 137 c/kg cwt.
The saleyard restocker lamb indicator is measured in $/head, and as seen below in Figure 5, the WA and Victorian indicators diverged in 2016. Between July 2015 and November 2015 the margin increased from a difference of $3/head to $31/head, but narrowed back to $9/head in August 2016. As of October 2016 however, the margin has blown back out to $32/head- the highest it has been since January 2011.
