The Sheep, Deer and Cattle Report: Early indications reveal support for Silver Fern Farms capital raising deal

LAMB

Lamb prices are creeping up in value, responding to the lower currency and shortage of supply, and Beef and Lamb NZ’s prediction of fewer lambs born this year will make processing competition fierce for the available stock.

One company has made an early plea to secure stock, with a supply contract offering premiums for volume and commitment that could add $2.25 - $5.60 per head for a 17.5kgCWT lamb, dependent on numbers, and summer or winter supply.

While scanning rates were down in the North Island, lambing survival rates and low ewe deaths have seen respectable docking percentages  for those at this stage, but most are disapointed prices for a 17.5kg lamb are only just making a $100.

Silver Fern Farms proposed Chinese partnership proposal has sent shock waves through the red meat sector, changing this once big, but debt ridden entity into a debt free company with cash in the bank to compete strongly for stock, and some fear the industry will be dragged into a procurement war this season, should this venture get approval.

Some negativity has been heard from the shareholders as Silver Fern Farms sells the message in national roadshows, associated with the increased foreign control of this deal, but such is the financial strength of this proposal that includes a dividend payout, huge lift in share value and the promise of regular profit shares, it seems improbable that this will not go ahead.

WOOL
This weeks North Island auction saw values ease on a lifting currency and buyers reluctant to push prices from last weeks yearly highs.

Coarse wool values are at their highest levels since late in 2011 and with few stocks held and sheep numbers low, prospects look good for the oncoming season.

Merino values are also on the up, and last weeks Melbourne sale continued this momentum, after the previous years low prices has seen many high country growers changing breeds to crossbreds for lamb production and lowering supply of this unique product.

BEEF
Beef prices seem to have peaked in price recently, stalled by quota issues and some consumer resistance to the high prices in the market.

The long running industrial dispute AFFCO has been having over a preference to hire only those with individual contracts, has caught global union attention as the meat workers union fights for survival.

Rabobanks farmer optimism survey has shown those with beef in their stock portfolio are a lot more optimistic about future farm investment than those only with sheep or dairy.

Heavy quality prime animals are being sold in the saleyards consistently for over $2000/hd but buyers are being careful to discount  dairy type animals especially those rejected out of the dairy herd.

The annual spring bull sales have started, many targeting low birth weight attributes suitable for dairy cow follow ups, but AI firms are sharpening the pencil to convince farmers to continue using the straws, and one firm is offering delayed payment until after mating when the bull is sold.

DEER
More lifts in venison schedules as prices move closer to the $9/kg level, helped significantly by the exchange rate that is about 12 - 15% lower now than at a similar stage last year.

Southern  animals have been slower to reach their chilled target weights after a long cold winter and some areas suffering drought induced feed shortages, but North Island animals are starting to fill contracted positions.

With venison production falling and these prices at sustainable levels, some reinvestment in young females is sure to re occur to tighten supply further, but more experienced deer farmers will be wary of returning to the boom bust scenario of the past.

As some early heads get close to harvest the velvet market signals are too early to predict, but the uncertainty caused by the Chinese share market will be compensated somewhat by a more positive currency position.