DAIRY
The dry conditions are continuing and expanding into the southern regions, and milk production has now started to crash.
Predictions are being made however that yearly milk flows will still be ahead of last year despite this rapid fall off due to the now widespread drought.
Four regions Northland, Waikato, Hawkes Bay and Bay of Plenty have now been declared drought zones and three of these areas farm a significant number of dairy cows.
All avenues of management techniques are now being implemented to combat the situation, as many operators are culling to winter herd numbers, drying off thin cows, and reducing milkings to preserve body condition scores, amid heavy supplement feeding.
Forecasters have given some hope that the early signs of changes are being seen in the weather systems, but it will be later in March before any significant rains are likely.
When droughts move into the autumn they have long term consequences and with a large area of the north island under pressure soon there will be no where for animals to go for feed.
Fonterra’s plan to address the high cost in capital of its shares for new entrants revolves around giving shareholders more time to share up, and to appease existing shareholders has offered bonus shares for every 40 owned, as it works to develop ideas on its milk production growth strategy.
The dry and falling production has fired up the latest auction prices with big lifts for all commodities traded. Now all products are at yearly highs and analysts report they believe price rises are not over yet.
Fonterra has also confirmed its payout forecast in the $5.90-$6/kg ms range which will give dairy farmers some surety as they fund expensive supplements and grazing during this tight feed period.
With NZ being such a big exporter of dairy products and other countries also having weather related supply problems firm pricing levels could be around for a good time yet.
LAMB
Further schedule falls have seen average prices look to break into the $3/kg level as farmers despair at the future of an at-risk sheep industry.
The worst scenario has arrived with little feed and low prices testing even the most ardent sheep supporter.
Processors are blaming cheap Australian product and the strong currency, along with the recession in Europe dampening demand for lambs demise, but report the recent cheaper price levels have rekindled consumption and stocks are now moving through the market.
Stock prices have also now fallen in the south as the weather impact is now nearly national, and farmers have been urged to seek help with financial planning as this poor profit year has followed last years successful one, and provisional tax payments will need to be adjusted.
The stock processing figures are well ahead of last year and in some areas space is difficult to acquire adding further pressure to farmers decision making processes.
Saleyard store lambs are having difficulty finding homes although cropping farmers with irrigation will look to recoup losses made on last years trading lambs.
Capital stock sales have seen price levels reflective of the present market and very good flocks are averaging under $100 per head.
WOOL
A better sale saw clearances in the 90% at the last auction as the crossbred wool market continued its steady trends and the mid micron sector firmed.
A positive reaction to Wools of NZ successful capital raising will give some hope that more discipline in this market will give shareholders long term returns.
Processors report slipe wools have met good demand and with pelts are contributing significantly to processed sheep returns.
BEEF
Bull and prime schedules are now at yearly lows in both islands as earlier optimism has disappeared.
Beef processing numbers are well ahead of last year, as farmers have killed at lighter weights to destock because of limited feed.
Processors report that the long awaited supply issues caused by the US drought will soon help in the turnaround for manufacturing beef but early killing by drought affected farmers may mean they see little of this predicted price lift.
The first of the weaner sales have started in the northern saleyards and have reached price levels that are back 55-70c/kg lwt on last year, and on lighter animals which will be another financial hit for the breeding farmers.
Such is the widespread nature of this drought in the north island if it does not rain soon this could be a problem for later weaner sales.
Nervousness is also evident from the report about NZ’s preparedness for a foot and mouth outbreak, as holes were found in the system protecting us from a biosecurity breakdown which would be catastrophic for the economy.
DEER
Relief that the summer schedule bottom has now been reached and the challenge for marketers is to move stocks of frozen product in a European market weary from the recession times.
While the industry has made a concerted effort to reduce this products reliance on the German market, the success they have had has been into other European countries also influenced by this regions financial troubles.
The dry will worry weaner sellers especially in areas that are traditionally summer safe as they try to produce heavy early finishing animals for the spring market.
Positive reports continue to be heard about sales of velvet being made at stable price levels.
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