Market Morsel: Spreads tell a story

Market Morsel

East coast lamb markets saw a surge in restocker lamb prices last week with Meat and Livestock Australia’s NLRS team reporting a huge 133 cent gain for the week on the Eastern Restocker Lamb Indicator to see it hit 856c/kg cwt.

A look at the price spread to the Eastern States Trade Lamb Indicator (ESTLI) shows just how aggressive the appetite is for restocker lambs across the east coast with the spread sitting well above the average level expected for this time in the season, and significantly above the normal range, at a 26.8% premium.

The very favourable three month rainfall outlook for the east coast released by the BOM recently clearly encouraging producers to restock. Another signal of the improved climate outlook for spring and the tight season, particularly across the eastern seaboard, is the narrowing of the East coast mutton spread to the ESTLI.

The Eastern States Mutton Indicator lifted 47c last week to hit 576c/kg cwt and saw the spread to the ESTLI narrow to just a 14.7% discount. This is the narrowest this spread discount has been all season. Indeed, it hasn’t been this narrow since the very wet 2010/2011 seasons.