Outlook for lamb prices firm
The dry summer conditions in the south have been reflected in the seasonal flow of stock into Alliance Group processing plants.
Alliance livestock and shareholder services general manager Heather Stacy said volumes of lamb going into the cooperative’s processing plants were ahead until Christmas, but then processing fell back when lambs that would usually be processed early in the New Year went to store sales.
Processing numbers had been a flat line, rather than the usual peak, she said.
Lambs had only begun to trickle in for processing in the past couple of weeks.
‘‘Our outlook is really that the profile for the full season is going to be something that we haven’t seen before.’’
While the dry summer may have knocked farmers off their usual processing schedules, grass growth had bounced back across the south.
Stacy predicted the season would have a steadier drop off than the usual peak and trough, with farmers holding onto stock longer to manage the new grass growth. However, if there was a cold snap and grass growth dropped, farmers would be looking to move extra stock off-farm quickly, she said.
Prices had remained firm throughout the season, with strong demand for sheepmeat from overseas markets. The cooperative’s chilled programme had come to a close.
The focus for the co-operative following the end of the chilled period was to ensure returns could be captured from the market as quickly as possible, Stacy said.
There continued to be strong competition for lamb, but it was important to maintain sustainable returns for the product throughout the year, she said.
‘‘It’s important we don’t get the livestock procurement out of sync from what has been returned to our markets.’’
After a surge of store lambs leaving Southland earlier in the season, Stacy predicted there would be further lambs leaving the region in the next month.
There was still demand for store lambs at the top of the South Island, she said.
Lamb prices are tipped to continue to be strong through to the end of the season. Alliance is offering a minimum price contract of $6.60/kg of carcassweight to May.
Stacy said it was a good time for farmers to be shoring up their businesses.
‘‘What’s important to us is that the returns are sustainable. Farmers don’t want to be in an environment of high volatility because it’s difficult to run their business.’’
Meanwhile, dairy cows were beginning to flow through processing plants, with the combination of scanning for empties and milk prices driving up the number of culled cows, Stacy said.
‘‘Farmers are now focusing their efforts on the more productive cows in their herds.’’
Alliance Group will also be making its loyalty payments at the end of April.
Stacy said the payments recognised the commitment of platinum and gold shareholders’ support for the co-operative. Under the current pricing model, platinum suppliers supply 100 per cent of their livestock to Alliance Group. Gold suppliers supply 100 per cent of one species to the cooperative.