Thursday, December 7, 2023

Prices push big sales

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Palmerston North farmer Andrew Dignam was a buyer and a seller at the Feilding sale yards on Friday.
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Dignam had bulls for sale and was looking for replacement stock.

There was a big yarding of cattle available at the sale with about 2000 on offer, including 790 year-old steers and 700 yearling heifers.

Dignam was not surprised with the size of the sale, saying with the grass market coming on some farmers are stocking up.

Some of the larger farms in Hawke’s Bay and Wairarapa are choosing to sell stock with dry conditions kicking in on that side of the island.

The meat schedule is starting to step up so he expects there to be plenty of interest from farmers.

Farmers enjoy price bliss

Red-hot lamb sales have lifted the AgriHQ new-season indicator price to record levels over the near 20-year history of the database.

New season lamb prices kicked in last week with an average of $9/kg achievable in both islands.

“We’ve never seen it here before,” AgriHQ analyst Mel Croad said. 

She thinks the market and the outlook justify farmers thinking seriously about increasing flock numbers.

Bull prices are at or above $6/kg, levels not seen for a good five years, amid strong and increasing competition from the United States and China, especially for the 95CL lean beef for the manufacturing sector.

“It’s been going up by 10c to 15c a week and the US price of US$2.85/lb is up from a $1.92/lb this time last year,” Croad said.

The high prices are on low supplies and the market test will come over the next few weeks as processing numbers build up.

Prices will stabilise but Croad believes international demand is such the market can take the increased volumes.

A more immediate challenge for farmers could be to ensure killing space at processing plants before Christmas.

Many will be thinking the same way after a cold spring held back stock weights and condition. The warmer weather starting last week could change the supply scenario quite rapidly, she said. Plan ahead and be sure of space is her message.

Even if prices come back slightly they will still be at historically high levels and the speed of the market gains feeding into farmgate prices has been a surprise, especially for bull beef, so anyone killing stock over the next six to eight weeks will be exceeding their budgets.

“No-one predicted the US price for 95CL would get close to US$3/lb. It might stabilise but who knows.

“The US was caught short, not taking enough notice of China and now they’re having to bid up to get it.”

For the time being China is the stronger buyer.

The two markets are also the driving force in the lamb market . . . China on volume and the US on price. And the Brexit delay has revived interest in the United Kingdom for the Christmas chilled market.

“There’s more confidence there and UK lamb pricing is up.”

AgriHQ data shows the current UK leg price up about 20% on this time last year and 30% on the five-year average. The US French rack price is up by a similar level on the five-year average.

Following The Lamb Company chief executive Tony Ruffo saying low lamb numbers are likely to limit further volume growth in the burgeoning North American market, Croad said it’s time for farmers to look at boosting their flock numbers, though the capital cost will be quite high right now.

“I’ve been singing from that song sheet for a couple of years.”

Markets can and do change quickly and farmers might be thinking $9/kg could easily come back to $6, given what has happened to some earlier peaks.

“But the market has matured and shown with the NZ and Australian volumes in the last 18 months that it can handle the higher levels.”

The US lamb story reflects what is happening in a lot of markets and China is in the market in a big way as the diet becomes more westernised.

The swine fever hitting the pork industry in China is likely to take several years to work through, giving NZ time to cement in both its sheep meats and beef in that market. After big Australian lamb supply because of drought, that country might now take at least a couple of years to rebuild its flocks.

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