Wednesday, April 24, 2024

An autumn market, but not as we know it

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There’s a split in South Island cattle fortunes – the top half grinding to a halt as the dry bites, but good returns on flourishing pasture in Southland.
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The halfway point of March has passed, meaning the autumn store cattle market is now well underway. While it is still fairly early days, the second half of the trading season is shaping up to be different from normal. 

In the South Island, it has been a game of two halves. There has been a clear split, with the upper half of the island almost grinding to a halt in trading as dry conditions have put feed levels under pressure. 

Unit-loads of weaners have headed north across the Strait in search of greener pastures as water restrictions and barren paddocks in Canterbury and Marlborough left few alternative outlets. 

There is no meaningful rain forecast in these regions over the next two weeks. Farmers are therefore focusing on making sure the stock they have on hand don’t lose condition, rather than adding extra mouths to paddocks.

Earlier this month, the Southern Man cattle sales featured at Lorneville. These sales are usually the first real gauge of the South Island store cattle autumn market. With a large portion of the buying power from outside regions missing, there was some apprehension as to how the sales would go, given Southland had already taken on a lot of extra cattle when initial El Niño concerns were raised. 

But the ideal conditions have continued and Southland pasture is flourishing, and surprisingly, the market strengthened by about 5c/kg on traditional steers compared with last year. Angus, 400-500kg were commonly $3.05-$3.10/kg. The favourable season did mean cattle were of improved quality and weight, but this isn’t the only reason values were stronger. 

Comparing this season with five-year averages over the same period, the strength in the South Island cattle market is clear. 

Agents have consistently voiced their concerns, as the season has progressed, around the impact of the lack of calves reared. Fewer dairy-beef calves reared limits the options of cattle available, especially for those looking for a cheaper alternative to straight beef breeds. 

The South Island bobby kill lifted 6% in 2023 from 2022, after Fonterra implemented its new bobby kill ruling. That equated to 51,000 fewer calves reared. Therefore, more buyers are having to pay for traditional types and this is keeping pricing firm.

In the South Island, season-to-date, yearling/R2 bulls have eased from an average of $3.25/kg to $2.70/kg. But this remains above the five-year average of $2.53/kg. 

Factoring in that nearly half of the island has buttoned off its buying power due to the dry conditions, the support stems purely from the lack of availability this season. 

Yearling and R2 steers have fallen 30-40c/kg since the beginning of the season to a fairly stable level of $2.80-$3.10/kg. The five-year average shows they normally ease 50-60c/kg season to date. 

When it comes to the North Island, there has been a reasonably solid start to the beef weaner fairs. Rainfall in Waikato and the King Country has meant traditional steers have sold for early $4/kg at around 220-250kg, at the saleyards. 

The supply of R2 cattle available is limited. A lack of R2 bulls, in particular, are struggling to fulfil demand for the reason stated above, and South Island offloads across the Strait, including freight, have been competitive with North Island prices.

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