Monday, February 26, 2024

Market improvement vital for the sheep and beef sector

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Overall, market conditions haven’t changed a great deal since last month.
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For the third straight year, summer has started on a soggy note for most. Grass growth rates are humming, but dry conditions are starting to creep in here and there across various parts of the country. While having few feed pressures to worry about is positive, ticking off on-farm jobs has been a long, drawn-out process. 

No one wants a repeat of a summer void of sun and warmth like last year, but plenty could have done with an early dose of vitamin D through November. There is no question that the flow of new season lambs and finished cattle is behind the eight-ball in the North Island. Lamb growth rates remain marginal, and cattle are still shaking off the remnants of their winter coats. The season has been slightly different in the South Island. Early draft lambs were lacking a bit, but supplies have since picked up into December. It’s been a split decision for those with cattle – to go now or utilise the feed that is around to add weight.  

Having the ability to dodge low farmgate returns in favour of adding a few more kilos of liveweight has been favoured where feed is flush. However, that must be weighed up with carrying additional mouths into the new year, when the prospect of a drought is present. Fortunately, staffing rates at processing plants has improved from the last two summers, but that doesn’t erase the possibility of backlogs appearing between January and March. 

Overall, market conditions haven’t changed a great deal since last month. The volume of NZ lamb being exported is still at relatively good levels but that reflects the lower pricing point rather than improving demand. There have been some subtle signs of improvement within the Chinese market, but most are hesitant to read too much into this yet. Key markets are well versed that the next three months will see large volumes of lamb and mutton being produced in NZ and therefore exported. 

On the beef front, seasonal pricing pressure has started to filter in as slaughter numbers start to build to summer levels. But looking further out and all eyes are on the US market.  Once US producers put an end to herd liquidation, this market has the potential to be a shining light for returns in 2024. 

 With a new year just around the corner, the need to see an improvement in market conditions is vitally important for the sector. The current phase of global supplies outweighing demand particularly for lamb isn’t going to change in the short-term. We need to move past blaming Australia for our current low prices and start focusing on what we can control so when the tables turn, we are in the best position to capitalise on it. A timely reminder to markets on the merits of quality over quantity wouldn’t go a miss either.

This article was written by AgriHQ analyst Mel Croad. Mel reports provide key insights into what makes our sheep and beef markets tick. Subscribe to AgriHQ reports here.

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