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Merino Gross Margins

WoolPoll Levy

5th April 2012

Merino sheep have come out on top when it comes to gross margins in the nation’s sheep-wheat belt.

Albury agronomist John Sykes presented early data on average gross margins for 2011 showing Merino sheep at just under $500 a hectare. This was comparable with canola on a gross margin also at just under $500/ha.

Prime lambs were hot on their heels at more than $400/ha followed by cattle at just under $400/ha.

Speaking at a southern NSW pre-season cropping seminar, Mr Sykes said Australian Hard 2 wheat had the next best gross margin at $350/ha, closely followed by barley on $340/ha. The average gross margin for wheat in the southern NSW region bounded by Yarrawonga and Holbrook was $200/ha last year.

Triticale was the worst performer at just over $100/ha due to poor prices and yields.

Mr Sykes said average wheat yields of 2.5-3.5 tonnes/ha could not match the $500/ha gross margin generated by Merino sheep. “In order to match livestock gross margins, we need to get a canola yield of 1.25t/ha,’’ he said. “If we can get our sheep stocking rates up from 7.5 DSE to 10 DSE/ha (in the sheep-wheat belt) at a gross margin of $400/ha, we start to make some pretty good money.’’

Meanwhile, according to the National Australia Bank Agribusiness January rural commodities wrap, livestock commodity prices are expected to remain high by historical standards.

The report revealed demand conditions were weakening for wool but Chinese retail sales and tight global supply would provide some support to prices. Lamb prices are expected to continue to weaken compared to 2011 but will be underpinned by strong export demand.


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