Playing to supply and demand

The market is the market and the key is to work with the market.

These sage words also apply to the livestock market.

The current price for a store lamb is around 53-54 per cent of the current schedule, says independent Wanganui livestock trader David Cotton of Rivercity Livestock.

"My first livestock manager, Ted Wilson, said to me 35 years ago, 'the market is the market. We are not here to make the market, we work within it because no one is bigger than the market', although over the years I have seen those who think they can be - most of them have gone broke," Mr Cotton says.

It's a no-brainer where the current best returns are.

"With most good store lambs round 30kg-33kg making $85 to $90, you can see there is little margin for the traders this year."

Buy retail, sell wholesale

"If you can't beat them, join them - sell them on the store market," Mr Cotton says.

"The strong demand is coming from the Hawke's Bay and those farmers who have secured works contracts. A number of plants are killing three or four days a week with the likes of Waitotara [Silver Fern Farms] closed. This has taken capacity away and lowered demand - lamb schedules are holding at $5.60."

Ewe prices

"A good number of in-lamb ewes have hit the market in the past two weeks. Most are making around $120-$135, with twinning scanned in-lamb ewes $150-$168, and light ewes or low mouth $75-$90. A line of capital stock 2th run-with-ram ewes in Feilding on Friday made $134 - these look good shopping to me."

Cattle prices

"The cow kill is over and plants are again short of cattle. So again the rule of supply and demand kicks in and schedules are on the rise. Heavy ox have made up to $4.20 last week in some areas.

"Watch out - there is talk of killing cattle before July 1 to avoid NAIT tagging, and this will put pressure on space in the short term.

"Cattle contracts for prime ox and heifer came out this month at $4.35 for late July, ranging up to $4.55 for delivery in September. I'm off to Fieldays - my big purchase for the year is going to be an EID wand/I Stick to read NAIT tags."

Doing the math

The law of supply and demand is key to all markets. For example:

40kg male lamb @ 45 per cent = 18kg x $5.60 = $100.80

Less levies - $2.30

Nett $98.50 (less grading)

40kg male store lamb @ $2.90 live wgt = $116

less fgt/commission/yard fees - $8 =

$108 (and no grading)