Optimistic on prices, but with a caution
Dairy farmers can be “cautiously optimistic” that current forecasts will hold, but it will depend on the global economy, says ANZ agriculture economist Susan Kilsby.
The going rate is about $7/kg in the North Island and $6.60/kg in the South Island, depending on the processor.
“Generally at this time of the year we would be seeing a lack of space at the processors and they would pay a little less for lamb,” she told Rural News.
“But this year the lambs have been slower coming through. And the strong international market has allowed the processors to keep prices strong.”
ANZ’s March Agri Focus report says the number of lambs processed from the beginning of October until the end of February was 460,000 fewer than at the same time last season. Throughput during that time was particularly low in the South Island, where it was 9% behind. In the North Island numbers are running about 1% behind, with processing catching up only recently, but not a lot.
“We certainly haven’t seen the chains running at full capacity like we have in other years, or any backlog. Right through, farmers have been able to get lambs away as they’ve wanted to,” she added.
“We had good growing conditions earlier in the year and farmers have held onto lambs so the average processing weight has been 18.8kg rather than 17.9kg which is pretty significant.”
But there’s no improvement on the horizon for coarse wool though.
“I am sure at some stage someone will come up with a great use for it and the markets will improve but certainly there’s no light in the short term,” says Kilsby.
“But at the moment the lamb returns are so strong that is outweighing the negativity in the wool sector to a great degree. As for farmers who are more reliant on wool – your finer wool producers’ wool [prices] have held up much better than the coarse wool prices.”
The beef processing volumes are starting to rise as they typically do at this time of year, she says. “The dry weather spurred that along.
“The markets are doing pretty well and it’s China that is helping that out. Normally we are sending most of our poorer quality manufacturing beef through to the United States whereas this year there has been stronger demand for that meat as well from China. That means we are sending less to the US which has helped keep US prices strong and we’re also getting returns from China.”
It’s a positive for the industry to diversify a bit more away from the US market we have always relied on heavily, she said. Horticulture is still the industry with good growth expectations in general, says Kilsby. A lot of the crops are being harvested now: apples are virtually finished and kiwifruit is going strong.
