US demand boosts beef cattle prices
Sheep and beef farmers are achieving better prices than their dairy counterparts this season – but don’t expect them to celebrate.
Beef, lamb and wool prices are all trading close to or above the dairy payout, with early season lamb comfortably above $6/kg and expected to average $103 a head for the season.
Spurred by demand from the United States manufacturing beef market, farm gate cattle prices are now at unprecedented record highs, with South Island steers and bulls selling at just over $5/kg, up $1/kg from this time last year.
New Zealand Wool Services International’s coarse wool indicator is presently about $5.50/kg clean after peaking earlier this season at $5.70/kg.
Crossbred wool producers were expected to achieve prices slightly better but no worse than last year, marketing executive Malcolm Ching said.
In contrast, Fonterra’s forecast dairy payout for the 2014- 15 season, already cut from $6/kgMS to $5.30, is tipped to go even lower.
While beef and lamb prices traditionally level off as the main season supply becomes available, Silver Fern Farms expects farm gate prices for the next 12 months to trade at $ 5.50-$ 6.70/ kg for lamb $4.50- $5.50/kg for beef.
Beef + Lamb New Zealand Economic Service chief economist Andrew Burtt said beef prices have risen in response to the cattle herd in the United States falling to a 60-year low
and after a long-term herd and prolonged drought.
In October 2014, average beef export values were just under $8000 a tonne, compared with $6100/t for October 2013, and an average of about $6000/t for the past four seasons.
Cattle revenues are estimated to represent 23 per cent of a farmer’s income in 2014- 15, compared with 20 per cent in 2010-11. Average sheep and beef farm profit before tax is predicted to increase 8 per cent on last season to $110,800.
Northern South Island Beef and Lamb Farmer Council chairman Mike Williams said it would be nice for sheep and beef
sell-off to have its turn in the sun.
‘‘We don’t want it to be at the expense of the dairy industry.’’
‘‘ You don’t really celebrate until you have the money in the bank. We are only entering the time of the year when most farmers are starting to sell lambs and cattle. We have seen prices high at this time of the year and then drop as greater numbers become available.
‘‘One issue for sheep and beef farming is that dairy has looked a more attractive land use and so people who could convert have done so,’’ Williams said.
‘‘I’d like to see the conversion rate halt, and there are hopeful signs we are seeing the end in the decline in sheep numbers.’’
While the beef price lift was welcomed, good quality prime
‘‘Bull beef, used in manufacturing (grinding) beef, is getting as much as good prime steer or heifer. The differentiation in price could be higher, and some meat companies are starting to offer premiums for quality.
‘‘ Beef cattle has always struggled financially on a dollar return a stock unit, but it plays a great role on the farm preparing pastures and eats a lower class of forage.
‘‘Things are looking good. We had a good lambing season with good survival and growth rates.
‘‘However, if we don’t get rain soon, growth rates will slow,’’ he said.