The Sheep Deer and Cattle Report: Wool leads the way but a slow turnaround for lamb is predicted

LAMB

Still little positive news out of the lamb markets, as selling product into two of our most important markets, the UK and China has been tough, and recovery in China is not expected until the end of the year.

Prices are well back in both of those markets on last year, and while the US and pound exchange rates are more attractive, the Euro is still unhelpful in stimulating any turnaround.

Farmgate prices are still under pressure as prices remain at February levels, and the arrival of any winter premiums seems distant, although chilled product is becoming a bigger part of the kill as the season continues.

Winter contracts are being quoted in the $5.20-$5.80/kg cwt rang, with little upside predicted in the spring period.

Most sheep flocks in the country are starting the winter period with reasonable feed supplies, apart from North Canterbury where drastic destocking of capital stock and large feed bills are now the norm.

The Meat Industry Excellence group is floating the idea of forming a new meat industry Co-Op by combining the best bits of the two major players Alliance and Silver Fern Farms, and getting a medium term commitment to supply from it's shareholders, and the calculations have the backing of some bankers.

The "devil will be in the detail" and plans for the less profitable bits left behind are less transparent, but the proposal is with the two companies and they await their response.

This group is to be applauded researching ideas for change as most agree following "the status quo" should not be the only option, and warn that the recapitalisation of Silver Fern Farms could see a return to foreign ownership of the meat processing sector.
 

WOOL
 

Surprisingly, after many years in the doldrums, wool is the in form product at present, and last weeks South Island auction saw mid micron, fine crossbred and lamb indicator prices, reach yearly highs.

This is a welcome boost for the sector, but the challenge for the wool industry is to maintain these good prices, and allow the sheep sector to rebuild it’s profitability so it can compete for land use options.

Bale numbers are down 13% at auction reports one analyst, but the good prices could see more wool offered via this selling system as stocks held are light and are driving demand.

BEEF

Small movements this week from beef schedules as the cow slaughter passes it’s peak, and the supply pressure eases in the US manufacturing beef market.

The currency is helping keep NZ 's product price competitive, and bank analysts predict the US dollar to fall to 70c by the years end.

Prospects of herd rebuilding in the US as heavy rains in Texas curtails the drought, and the resulting reduced domestic supply  and the oncoming grilling season should help demand later in the year.

Beef and Lamb NZ are trying to organise a collaborative market development plan from all NZ processors and exporters, and this will be pleasing to producers who believe competition should be with other countries, not from within.

Ravensdown have announced increases in superphosphate and DAP prices as a result of the easing currency and surplus global supplies, but the price of urea has fallen to compensate slightly.

DEER

The near record venison prices achieved from sales into Europe have failed to be paid at the farm gate, as the currency has eaten away at margins, but the growth of chilled product selling into the US is balancing the returns.

Unexpectantly one company lifted venison prices this week as lower volumes produced and interest in the chilled season product starts.

Deer light leather sales have dropped by 70% in the last four years and redundancies loom for workers at the processing plant in Timaru.