Unprecedented Conditions Bring Hectic Post-Sale Lamb and Sheep Negotiations

While the crux of an auction system rests on competition and efficient time sensitive selling, the ability for additional sales to be locked in after auction plays a pivotal role in increased sale clearance. This is particularly true when buyers and sellers are tested with unprecedented challenges, such as the current widespread rain and flooding experienced across much of eastern Australia. Post-sale negotiations have proven to be an important way of facilitating transactions between vendors and buyers to secure the sale of stock after the conclusion of online sales.

The most recent weekly commercial offering of sheep and lambs on AuctionsPlus, which totalled 147,588 head, the largest listing to date in 2022, provided a great example of the activity which goes on after the “hammer falls”. Following several weeks of seasonally low lamb numbers, a surge of listings online was met with an overall subdued clearance of 23% at the immediate closure of sales on Tuesday. In the 48 hours following the sale, post-sale negotiations saw clearance rates almost double to 43%.

Taking a closer examination into purchasing trends, 54% of total sale transactions occurred during the auction. Post-sale negotiations with agent updates accounted for a significant portion of sales at 41%, while the ‘meet reserve’ option in the 90 minutes following the end of the auction accounted for 5% of transactions.

Initial clearance rates at the close of Tuesdays auction reflected a market struggling to absorb a sharp rise in listings, given the ongoing impacts of very wet conditions reverberating across many sheep and lamb producing regions. Despite reduced clearance rates, auction connections for the weekly sales continued to hold strong, with many “spectators”. Tuesday’s National lamb sale registered a total of 1,195 users connecting to the auction, while 1,367 users connected to the sheep sales - this is up 41% and 42% respectively on the three-year connection average for the sales (Figure 1). As such, this provides a promising indication that there is high and ongoing interest in the market, however, external environmental factors are putting a short-term hold on purchasing decisions for many users.

The biggest clearance movements came from this week’s lamb and unjoined ewe offerings, which registered a 41% and 24% rise in lots selling post-auction, respectively. Crossbred lambs which registered the largest offering for the week at 54,726 head, saw clearance rates rise from 14% at Tuesday’s close of sales, to 37% by 1pm Thursday.

The significant amount of post-sale negotiations this week has not only been met with buyers meeting the reserve after auction, but with sellers dropping their reserve prices to secure a sale. The average $/head value from reserve price is an important measure of market sentiment and demand - whereby high competition causes this figure to soar. During the sheep and lamb sales on Tuesday, the value from reserve was $39/head. Observing this figure for post-sale negotiations following Tuesday’s sale, the value from reserve average $-3/head – indicating sellers reducing their reserves to negotiate a sale.

Taking a further look into the online stats from this week’s sales, successful buyers made up 76% of total users logging in to the lamb sales and 76% of users logging in to the sheep sales – up from last week’s percentage of 74% and 68%, respectively. The increased buyer logins resulted in a wider spread of online buyers - with 115 different buyers in the National Lamb Sales, and 124 buyers across the National Sheep Sales.