The Weekly Livestock Report: Milk price falls fail to dampen payout predictions, small supply driven meat schedule lifts but calf prices feed driven

DAIRY

Most of NZ has now received rain although the North Island areas worst affected by the dry have missed drought breaking volumes.

Advisers warn against overestimating pasture recovery and plan conservatively for the winter, but in the Waikato, pasture covers and growth rates are now again normal for this time of year.

The expected price correction occurred in the global dairy trade auction but bank economists are still predicting payouts in the high $6’s and Westland Milk Products upgraded its forecast to the $6-$6.30 range.

Fonterra announced major job cuts in its middle management team and this bounced the Shareholders Fund values past the $8 mark and they also revealed a pilot scheme to give milk price certainty for farmers.

Synlait joined A2 Corporation to increase the supply of A2 milk through the infant formula Platinum brand destined for China.

Overseas ownership of farms continues with Harvard University buying another in the Maniototo but the source of workers to generate the dairy growth seems to be being increasingly filled by workers from the Phillipines.

LAMB

The northern short supply driven lifts in the lamb schedules have at last spilled over to the south, although exporters still report the high price cuts are difficult to move.

Demand will now be driven by maintaining a regular chilled supply to loyal customers which will be difficult after the early kill, and the BNZ reports the spring could bring another big drop in lamb numbers due to the drought and change in land use.

Conciliatory tones have been heard from all parties as the meat industry looks for a solution to its woes, and two more farmer meetings are to be held in the north as the mandate for change is confirmed.

Concerns in China as NZ’s reputation for food safety and quality are being damaged with the uncovering of a mislabeling of meat scam, that has reinforced the importance of our “pasture to plate” quality systems.

After the rains store lambs values have lifted as some lightly stocked farms are looking to recoup some of this years losses with what should be strong demand for late winter early spring animals suitable for the chilled trade.

WOOL

The smallest sale of the year has lifted prices in both crossbred indicators although lambs wools orders seem to be full and prices fell further.

Wet weather and drought have restricted wool volumes and the next North Island sale has been cancelled, and sadly it seems at present only supply restrictions are driving price. Australian wool prices are also falling, and a large capital stock sale in the north saw average breeding ewe values fall to $90 a head.

BEEF

More small lifts in beef schedules, as the promised autumn price turnaround has been painfully slow to eventuate.

The US market remains flat due to a cold wet April that fails to ignite the annual grilling season, and still higher than normal domestic cow slaughter rates.

The southern calf selling season draws to a close with purchasers happy with the prices that are 12-16% back on last year for heifers and steers and will compensate somewhat for the reductions in beef schedules.

A BNZ report warns of a large drop in cattle numbers due to the drought in the north which will expose a processing over capacity next year.

DEER

Venison production continues its seasonal decline with the products demand weak and schedules staying flat for the 13^th week. However lower pricing for the frozen product has helped make deals and good sales growth is seen in North America.

Stability has been seen for producer returns in velvet over the last four years but with most velvet now being processed overseas, concerns are being expressed on how NZ quality standards can be protected.

Retiring CEO of Deer Industry NZ believes improving productivity is the next big industry push as farmers maximise profits through improved per hectare and animal performance and this is being driven by the farm focus schemes.