Fortnightly Market Update

Livestock Market Essentials

Brought to you by Heartland Bank and AgriHQ

Updated 7 May 2018


Winter’s beginning to settle in across the country. Nearly all areas of the North Island are looking wetter and colder than a month ago, but are in general well poised for the coming few weeks. The main exception is the upper-half of the Manawatu which is still playing catch-up after a dry beginning to autumn. The slow growth earlier in the year has also limited supplementary feed supplies such as baleage through Taranaki and Manawatu. Frosts and the odd snow-fall are reappearing in the South Island, but as a whole the island has more than enough grass. A few heavy rainfalls last week have left parts of Canterbury a bit too wet though.

It’s all been downhill for beef. Part of this comes from the annual dairy cow kill, which has clogged processing plants and allowed schedules to be cut without much resistance. Manufacturing beef slaughter prices (e.g bull and cow) have been cut particularly heavily in the South Island. Any recovery worth mentioning is unlikely to develop until at least the end of the dairy cow kill in early June. Falling schedules and negative commentary from processors has shaken confidence in store cattle markets too. The store prices are slowly descending as a result, but likely won’t fall too much further from here unless the weather causes some havoc.

There’ve been mixed fortunes for beef exporters lately. Although the US beef market isn’t overly strong, it has lifted to the levels found in early April. Perhaps more importantly the exchange rate swung wildly back into exporters favour, accounting for a 4% increase in export returns in the past fortnight alone. Australia and South America have been a thorn exporters sides when it comes to prime cuts, however. They’re bombarding various Asian markets with beef, forcing NZ exporters to price lower to make sales. With that said China is still displaying solid demand for beef and is likely to hold in that position in the foreseeable future.

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For lamb it’s nothing but good news. Slaughter prices have either stayed strong or lifted further, and are set to follow this trend for at least the next few months. Although schedules are not likely to lift as much as usual through the remainder of the year, there is wide-spread confidence that we won’t see any downside, as occurred in 2011/2012 when lamb was last this strong. Store lambs continue to sell very well in all areas, aided by the confidence in the slaughter market.

Internationally it’s all stayed in lamb exporter’s favour. Global inventories of lambs are low while consumptions rates have not slowed at all. The US and continental EU are still the main bright sparks for the higher-value cuts, while China is buying up the bulk of the lower-end product. Summer is near for the Northern Hemisphere which typically see’s improved consumption in the US and EU, but lower consumption in China.

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Commentary provided and written by AgriHQ and the opinions expressed in the commentary are solely those of AgriHQ not necessarily those of Heartland Bank.

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