It’s barely mid-spring and everyone is already getting nervous about a potential drought. Paddocks throughout the country mainly carry good grass covers, but the shortage of rain in the past two or three weeks is putting a cap on growth. Areas that are particularly over-due for a solid shower or two include the Bay of Plenty, Hawke’s Bay, Wairarapa and the upper-half of the South Island. Elsewhere is tracking only as per standard spring fashion.
The short-term forecast for cattle slaughter prices is negative, though prime steers and heifers should fare better than bulls and cows. Processors margins on bulls are slim, if that, and they’re pulling cash out of schedules to try and find some level that is sustainable longer-term. Some processing plants are due to re-open soon though, so the need to fill chains may cancel out some of the downwards trend. The lack of rain and lower schedules has muted interest in store cattle, but vendors are still making reasonable returns. Only 1-year Friesian bulls are especially tough selling, still feeling the impact of the spread of M. Bovis.
It’s not getting any better for beef sales into the US, which is a bit of a headache given around half of all NZ beef exports are sold into there. There’s simply too much meat (beef and other types) in circulation in the States. Essentially US buyers don’t need NZ stock. Some exporters are pushing product into other regions where possible. It’s business as usual in the Asian markets – China’s buying with usual strong levels of interest, but Japan and South Korea are lacklustre.
It may not be the busiest time of the year for the lamb kill, but the limited production capacity in operation is creating backlogs around the country, allowing processors to pull slaughter prices downwards earlier than typical. Few and complaining though, as prices are still ridiculously strong compared to past years and the medium-term forecast is still positive. Heavy lambs are often being hit with penalties, however, as they don’t meet the specs required for the chilled Christmas trade. The store trade is in lull given nearly everyone is either lambing or docking. Ewes with lambs-at-foot are still selling quite well though, mainly $100-$120 all counted in both islands.
International lamb markets are mostly settled, varying between a little better or worse than a month ago depending on the country in question. General sentiment is optimistic for the 2018-19 season.
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