The Weekly Livestock report: Dairy prices ignore quality issues, and Bailey to lead Red Meat partnership

DAIRY

Some areas are talking about record mild August temperatures as feed conditions improve over the entire country and dairy stock benefit in the calving month and set up for the crucial second rotation.

Even in the south managers are reporting above average early season production and feed quality lifts as grass dry matter recordings are higher than the norm.

With the whole industry under intense scrutiny on the quality of its products more failings have been recorded and Fonterra reports it has moved to a triple check test to allay consumer fears.

Fonterra’s problems have shifted to Sri Lanka where local farmers have used the situation to highlight the plight of domestic production and succeeded in getting a temporary shut down while the issue is sorted.

Westland Milk Products has been given the all clear by officials from the Ministry after their nitrate issues, and all processors will be evaluating their food safety and quality systems as they strive to reassure the market of the industries high standards.

At this stage, NZ’s commodity dairy prices have been unaffected by these quality concerns with the last auction up 2.3% on volumes that were up 30%, on a year ago.

Overseas reports suggest premiums for NZ products are falling but analysts here believe this is just a normal seasonal adjustment.

And just announced by Fonterra, another 30c/kg ms addition to the projected payout to $7.80 before dividend, amounts to a huge indication of dairy product demand for this year.

The July bobby calf kill is 50% above last year reflecting excellent survival and growth of the sector, but increasing saleyards numbers has dampened down prices for dairy beef rearers.

LAMB

The cumulative July lamb processing figures have exceeded the last two years total tallies, and fears that female replacement stock has been harvested due to the drought, now appears realistic.

Schedules continue their spring rise on rapidly reducing volumes and now prices are only 14 cents behind last years rates.

There is industry unanimity that this seasons prices will be stronger than last and another salmonella brandenburg outbreak affecting southern sheep is very disappointing for those operators that are affected, given the positive prospects.

However good news this week in the announcement that Malcolm Bailey will lead the Red Meat Primary Growth Partnership where processors, Beef and Lamb NZ, the Government and bankers have joined together to improve per head performance in the red meat sector.

The goal is to make this sector more confident, productive and most importantly more profitable to be able to compete with dairys challange to land use.

Reports suggest it is not only dairy conversions that are lowering sheep numbers, but low barley stocks have seen increased acreage planted in favourable spring conditions to feed the milking herd.

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WOOL

The latest south island wool sale saw prices follow the recent trend with strong crossbred values, but weak demand for mid micron wools.
This will be very disappointing for these sheep producers as wool is a big percentage of their whole farm income for these operators and for most alternative stock options are not viable.

BEEF

Demand for prime beef is strong during this seasonally quiet period, and saleyard prime steers saw big lifts in values especially in the north as quality animals dwindle.

Prices are now at yearly highs in the north and close in the south and could return to levels last seen 5 years ago.

The US domestic cow market continues to firm as reports reveal local corn prices are falling and more cattle are put onto feed, lifting price prospects for NZ later in the year when our manufacturing beef market recommences production.

Most store cattle offered at saleyards have met very strong demand as operators look to lift the stocking rate to harvest rapidly growing early feed. July kill statistics show yearly kill numbers of beef are 11% ahead of last year lead by a drought induced cow kill.

DEER

September sees a rapid rise in venison production aimed at a rising schedule and the European game season trade. Exporters report a bigger percentage of exports have been frozen this last year thus lowering the average returns, but recent currency falls against the Euro should help the competitiveness of NZ product. Early spring feed could help finishers achieve their chilled trade targets sooner although space allocation will be the key to killing any extra early animals.

Provelco reports on a positive visit to customers in China and Korea with the chairman Graham Sutton predicting a bright future for velvet but the growth will be in the functional food, beauty products and animal health sectors.

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