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The Weekly Livestock report

The Weekly Livestock report

DAIRY

Another reasonable spring week without the winds of the equinox that traditionally blow in late September have made the birthing month satisfactory for most.

Some areas however are reporting slow spring growth as they wait for temeratures to rise. Southern areas are reporting above average milk flows and Sheffields new plant has sent its first milk powder exports to China.

Fonterra announced their 2012 payout at $6.40/kg ms for fully shared operators but Tatua’s result was ahead by over a dollar and once again show that a small well run processor can compete in this very competitive market.

Most in the industry are positive with these results although the old concerns of increasing costs and operators with too much debt still remain, and unless this years predicted payout rises significantly, these issues will bite some.

The latest globaldairytrade results have resulted in a small fall in the combined price index but as it was on the back of substanial volumes of product offered commentators suggest this is a reasonable result. Henry van der Heyden is reported to be staying on the board after standing down as chairman and his experience will help smooth the transition.

Agents reveal good forward sales of cows at last years prices that seem undampened by the lower predicted payout and optimism for better milk prices remains with Rabobank suggesting a return to supply scarcity in the coming 12 months.

The fallout from the Horizon1 plan is building as farmers both dairy and sheep and beef calculate that they may have to significantly destock to follow the requirements of the plan. The minister of Primary Industries has commented that the economic cost of such a plan may be substantial and he wants to have a further look at it's implications.

LAMB

A lift in lamb schedules was overshadowed by Alliance’s announcement of the closing of the Mataura sheep plant with workers offered reemployment at Lorneville.

This second rationalisation of processing capacity in the south is a direct result of the dairying boom and the soon to be announced profit results from the big three will paint a better picture how they have coped with the sheep meats downturn.

Reports that processor stocks of unsold product are higher than normal will do nothing to lift the short term prospects of improved prices.

Industry innovator Craig Hickson has encouraged farmers to focus on the importance of meat yield in their lambs if they want to increase returns from their sheep flocks.

He believes $20 per head is there  for the taking if better yielding genes are invested in.

The first of this seasons spring lambs was seen at the Frankton saleyards and the return of $83 will make many nervous.

Prime lamb values at saleyards are starting to flatten as some are now being graded as hoggets and some operators will be cutting their losses and looking to refocus on the new seasons values and margins.

Lines of ewes and lambs all counted seem to be realizing values in the mid $60’s and with mutton schedules easing again, returns from this area this year have been severely dented.

WOOL

The South Island wool auction saw strong crossbred wool indicators firm again but merino and mid micron wools weakened further following sales trends in Australia.

Passings returned to nearly a third of the sale and with reports that growth in China is slowing rapidly, optimism of any quick turnaround is low.

While it is pleasing the growing values achieved for the stronger end of the crossbred market, the bulk of these wools are yet to come and growers will be hoping there is some value left when they are ready to shear.

BEEF

The US currency continues to hinder any support for schedule lifts and marketers report prices and demand seem to be moving sideways at present.

Any lift seems to be being pushed back into the new year but values are still ahead of last, and mild spring growth has kept the store market strong, driven by high local market prices.

DEER

South Island schedules are now averaging over $8 as the chilled kill of young animals is growing.

Stable market predictions for frozen product are helpful into the new year when farmers balance schedule drops with ability to put more weight on killable animals.

Good heavy velvet is now being harvested weekly and in settled weather the growth rates of the valuable appendage is spectacular.

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2 Comments

can i just thank mr norgate and his mates for sharfting all the shareholders,past and present in the nzx listed nzs.
job well done as it looks like it will be disappearing from the nzx
an opportunity for ordinary kiwi's to invest in the dairy industry gone,perhaps.

Thanks for the roundup Tony, much appreciated. I'd like to comment on the following statement.
"Henry van der Heyden is reported to be staying on the board after standing down as chairman and his experience will help smooth the transition."
 
Do you mean smooth the transition to TAF aka as trading away fonterra? I went to a farmer TAF induction this week, where we were informed (core co-op principle) how it may impact our business. I didn't think part of belong to a cooperative involved complicated and potential speculative behaviour. We are now obligated to purchase shares in a traded market when managing production variance, if we want to recieve full value of our milk. At the risk of being labelled risk adverse and non-progressive, it doesn't sound like much of a cooperative.Given the disjointed train wreck that is the meat and wool industry and ever increasingly dairy industry, what defines a producer cooperative, it's purpose, and what does it means to belong to one?