Wednesday, February 21, 2024

Stock class reductions cause for concern

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Farm sales, policy changes and other trends are having a skewing effect at the saleyards, with, for example, increased demand for lambs coming when ewe numbers are continuing to fall.
While the tallies available look to be good at present, the key point to note is that they have been exaggerated by capital stock sales, and that well will dry up at some stage, leaving a hole that can’t be filled again.
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Reducing stock classes are becoming an all too familiar sight at saleyards and should be cause for concern for those in the industry. The main culprits are breeding ewes and young dairy-beef cattle, which flows into older cattle also being harder to find.

Breeding ewe numbers have been inflated over the past few years due to farm sales and policy changes. While most of the in-lamb ewes bought at this time of year are lambed, the growing trend is for this to occur for one season with the ewes heading off to the processors on weaning, with more ewes purchased the following year to complete the cycle. 

This farming policy has grown in popularity over the years as more farmers move away from carrying ewes for a year cycle so that more intensive farming can be used, such as fattening lambs. But the equation is moving seriously out of kilter as the increased demand for lambs comes at a time when ewe numbers continue to fall, and without the ewes it is impossible to have the lambs. Even AI hasn’t managed to work around that one just yet. 

While the tallies available look to be good at present, the key point to note is that they have been exaggerated by capital stock sales, and that well will dry up at some stage, leaving a hole that can’t be filled again.

Relatively decent supply has gone through the North Island yards so far to give at least an indication of what the market looks like this season. Compared to last year, AgriHQ accumulated North Island pricing for 4-year-plus and mixed-age ewes is back on average $33-$44 per head. Two-tooth ewes are holding their own, though, and selling on a steady market at an average of $186, though some lines have exceeded $200. This could be a promising sign of rebuilding for the future. Four-year-plus ewes are currently averaging $162 and mixed-age, $149.

Pulling the numbers apart a bit further, since 2013 2-tooth prices have lifted by the biggest margin at $81 per head while the older age groups have improved $63. In that time frame, 4-year-plus ewes have varied in average prices from $99 in 2015 up to a massive $206 in 2022 as grass-driven demand meant extra buyers in the 5-year market in particular. 

Those same years were the weakest and strongest for the other two classes as well with mixed-age hitting the trough at $90 and peaking at $182 while 2-tooths dropped to an $100 average in 2015 and peaked at $184. For the past few years 2-tooth prices have been the most consistent and since 2018 averages of $172-$186 have been common. 

At these levels breeding ewes are representing good buying, especially considering that the lamb crop continues to diminish and so competition will only get stronger on smaller supply going forward.

Key North Island saleyards followed by AgriHQ show a downwards trend in the number of breeding ewes sold, which is cause for concern for the industry.

The significant reduction in dairy-beef calves reared over the past few years is now flowing into the supply being offered at the saleyards. Volumes of R1 dairy-beef cattle are typically low at this time of year and there is already some concern mounting that volumes will be very hard to find, even come springtime. 

PGG Wrightson regional livestock manager for Bay of Plenty Simon Rouse said the margins to be made on calf rearing have not significantly changed over many years.

“Minimal margins made years ago are no longer attractive enough to encourage rearers to carry on. We’ve lost some big rearers over the last few years, and it has to have an impact,” he said.

“The solution going forward requires an increase in forward-contracted 100kg dairy-beef calves, which provides surety for both the rearers’ margin and guaranteed supply at a fixed price for the grower/finisher. There is a huge opportunity.”

This article was written by AgriHQ analyst Suz Bremner. Suz leads the AgriHQ LivestockEye team, including data collectors who are tasked with being on the ground at sale yards throughout the country. Subscribe to AgriHQ reports here.

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