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Falling lamb schedules reflect the new market reality; Wool momentum stalls; Pasture growth slows

Posted in Rural News

LAMB

Reality has hit in falling spring schedules, as prices are now back about $45 a head on last year for a 17.5 kg lamb and they are at yearly lows in the south.

Last seasons lambs and prime hoggets are being discounted heavily and the local trade schedule is falling in tandem with export adjustments.

Cooler weather has seen the processing season slow to start as farmers with feed hold on to try and make lambs heavier to compensate for the price drop.

Few store lambs have been traded yet except in dry northern areas but values are certain to be well back on last years inflated prices, and landuse questions will reignite with this sectors poor profitability.

The combined loss of $131million by the two largest Co-Ops due mainly from their slow response to the sharp fall in lamb prices has seen both companies equity position drop significantly, and put pressure on all in the industry to produce sizable profits this year .

WOOL

The latest North Island auction saw prices ease again for most indicators and passings rise, as the momentum stalls.

After a steady period of about three months of small steady increases for cross bred wool we now hit the period where main shear volumes increase and the weather affects the quality of product offered, and this will test the markets strength.

Wools of NZ prospectus is looking for only $10 million of marketing capital from sheep farmers but may struggle with the downturn in sheep revenues, and will look at the predicted oversubscribed $500 million Fonterra float with envy.

The road shows presentations have emphasised changes in structure from the previous unsuccessful float which farmers failed to support and this new smaller  prospectus has a more realistic chance of success.

BEEF

The flat period continues with some easing now in export schedules for both prime and bull beef and exports into Korea and Indonesia in the past season were well down.

World wide optimism for beef is based on a 22% increase in consumption but it is yet to show in present prices although quality young store animals are fetching firm levels at saleyards.

Profit results from the two Co-Op's reveal beef pricing to farmers was more in line with the market and Silver Fern Farms lower loss was due to it's bigger beef and deer processing share.

Weaned dairy beef sales are now starting in earnest and attracting strong bids, ahead of last year and reflects optimism to future pricing levels.

DEER

Large readjustments continue in the venison schedule, driven by caution from importers in an uncertain European economic climate to buy and store New Zealand’s frozen venison.

The first animals were harvested recently from the deer progeny test as the industry seeks to identify the best growth rate genes to match the “heavier and earlier” venison goals.

Velvet market reports indicate that SA,A & B grades are selling for $102-$110/kg which is about 10% ahead of last year and aligned with earlier contract pricing.

DAIRY

Although the eastern northern areas have had some rain many regions have still not seen the periods of hot sunny conditions farmers are looking for.

While early production figures are well ahead of the norm recent slow pasture growth has seen a tailing off in milk flows.

Mating is now well through on many herds and managers will be looking to prevent seed head emergence to keep pasture quality up and some up north are starting to extend the rotation.

Silage harvesting is slow in the south with the cooler weather  preventing surpluses to be harvested.

Dairy prices via the auction again improved on the index but two of the main  products whole and skim milk powders fell in price. A significant price rise in cheddar  from the last auction carried the index forward.

Rumblings about Sir Henry van der Heyden staying on the board have surfaced and some shareholders are complaining of political interference with the election process.

Interest in the Fonterra Shareholders fund has come from the Chinese Government and again opponents of the TAF scheme comment on the conflict between milk price to farmers and return on investment to outside shareholders.

The Milk Regulation changes have been announced by Primary Industries Minister David Carter and this will see dairy companies with their own suppliers weaned off claiming extra milk from Fonterra. Smaller processors without farmer access will continue to have access to this supply of milk.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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