LAMB
As the Christmas chilled export production comes to a close and processing returns to frozen, the lamb price drops in response to poor global forequarter and leg demand, and there's little prospect of help from China this year.
Some analysts suggest schedules could fall by $1/kg CWT by the end of the year and if the dry spell is as widespread as predicted, they could fall by more and some early producers of prime lamb are disappointed this years returns are behind last years.
New Zealand’s major markets of the UK, China, and the Middle East all show weak demand for frozen product and prospects look bleak for lamb producers over what could be a difficult summer, feed wise as well, with many analysts agreeing the $100 lamb average may not be achievable this year.
Positive news from Silver Fern Farm's annual result with a significant $25million profit but more importantly a huge debt reduction from $288 million to $121million. And with the proposed Shanghai Mayling deal proposing to inject another $261 million capital this company looks well placed to improve shareholders future returns .
Many farmers have been claiming of colder than normal temperatures slowing the spring pasture burst as forage brassicas are now being sown but these will need early rains to produce good volumes to meet the predicted summer deficit.
The sheep numbers have fallen 4% to 28.6 million in response to recent changes in land use and poor returns, but the lower numbers have stimulated mutton sales again into China.
In the saleyards hogget prices have fallen with more spring lambs appearing, and the first numbers of stores were traded in Canterbury for $2.50-$2.80/kg lwt while in the North Island heavier weights from earlier lambs and more feed have attracted stronger bids.
WOOL
The latest South Island wool auction saw less stylish finer merino fleece ease, but all other classes lifted in price, with mid micron, fine and coarse indicator prices all recovering strongly from the recent easing of wool prices.
The currency, that now days seems strongly linked to the dairy auction, weakened, and helped breathe life into a wool market that had seemed to run out of momentum.
BEEF
Volatility seems to have affected the US beef market with falling domestic values dragging down the imported beef prices, and the rest of the years quota stocks hanging over the market.
The recent strong demand out of China has softened with supply increasing, and with better numbers now being processed nationally, this extra supply has eased the market further.
The prime steer saleyard market has dropped significantly with prices now in the $2.80-$2.90c /kg lwt range when only weeks ago they were well over $3/kg lwt.
Store prices has adjusted backwards slower, but even in the North Island where feed supplies are stronger, some dairy weaner bulls are now selling back at last years rates.
DEER
Processors are however positive for venison in the new season with demand reacting to the lower supply, and returns should at least match last seasons levels, subject to a reasonable currency.
Schedules are easing as the European chilled game market has reached it's shipping deadlines, but optimism on growth of summer chilled sales into the US and Europe gives hope that the dependence on this market is weakening.
News that New Zealand trade officials are looking to progress Free Trade Agreement talks with European Union officials will excite venison and lamb producers as that region is an important market for both products.
Price news from early velvet sales has been hard to source reflecting a cautious start to the season, but fundamentals are still strong and prospects look positive given the present currency levels and a Korean excise tax that is due to be removed early 2016.
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6 Comments
Certainly bleak alright, lamb schedule already 70 cents less than last year, and the dollar is 12 cents in our favour. To add salt into the wound north Canterbury is looking more desert like by the day. I normally summer 5000 su, by the time all my lambs go in next 3 weeks I'll be down to 1800 ewes and 35 cows, not sure if I can get them through January without feeding out. Round two of the drought is starting and this will put many on the ropes.
Not sure how bad the lamb price will go, but I reckon it could be low $4.
Sheepish, thats sounds bloody awful. HB is short but green, was out the coast at the weekend and a friends place was short and all the stock was thin but he had enough to scrape by. I purchased 35 ylg bulls from southland for $730 landed as I'm trying to get all my bulls killed asap without much luck this week but down to the last 40 and we had 40mm last week. I only have a few acres and I normally carry 140 2yr bulls, this year I ran out of feed and I only had 80 on.
Manufacturing fell again at the auction in Oregon last week, my friend tells me it's a total buyers market.
I was in the UK the last 4 months and the sheep industry is in strife, most farmers moving to cattle, I purchased 20kg lambs for £70 and the farmer told me he is going to drop another 200 ewes this year and be out of sheep in 2 years. You could get half a lamb from the butcher for £45.
My grapes are over 30 growing degree days behind average and a big frost forecast for Saturday, at this stage I'm not sure my frost system will be effective.
Good luck with some rain, hopefully next season will be better for you.
Andrew
Thanks Aj. Yeah it bloody brutal. My dad who's been farm on same farm since he was 16 in 1956, reckons it the worst drought he's ever seen. Have been able to get baleage off 30ha of lucerne (150 bales) but I don't think we'll get much more to grow, some of the best Lucerne country in NZ, only had half an inch of rain in last six weeks, Saturday was 30 degrees. Rain for last 17 months has been 450 mls, normally 1000mls in that time. Surrounding areas all in same boat in last year, and only going to get worse. To top it off our vineyard friends down the road in waipara had a 3 degree frost last week, no inversion layer and lots of vines got nuked even with frost fighting. Last years crop overall was down 53. % for the region. No one is winning down here.
My grapes got a bit of a touch up but survived, the problem up here is selling the stuff. Next Year California is forecast to have 38 a million case + surplus and I think the new drink driving laws won't help, they hurt growers a lot in France when they lowered the limit there so expect the same in NZ. Grapes are coming out in Hastings, being replaced with apples.
Only thing positive is that you will be able to tell your grandkids of the big 2015 dry, also I'm always amazed how quick farms recover from drought in a few years it will hopefully just be a distant memory.
How are the poor dairy farmers surviving?
I guess the gdt auctions have been positive again till the last two, but any gain there has been eroded due to lower production. My fear in Canterbury is the El Niño, I'm sure many irrigation schemes will shut down early. Not sure how the groundwater is in mid Canterbury, but other low rainfall years have led to dry wells.
Really hate to be all doom and gloom.
Just polishing off a HB Merlot Cabernet, not bad
Some years ago I commuted in and out of London with a senior meat business executive, a specialist in the Middle East. He was astonished that no New Zealand lamb producers prepared kebabs and other styles for these markets. He was convinced that the promise of New Zealand raised and prepared product, with a reputation for safety and quality far above anything else in the region, would be a half-billion dollar business. Has any New Zealand company in the sector done anything like this?
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