NZ Farmer market dashboard
Gerhard Uys rounds up developments in the agricultural sector. Market data supplied by Rabobank.
Dairy
Demand for milk products could increase before global output recovered and a milk shortage is possible in future.
If buyer confidence increased and consumers flocked back and bought milk products en masse, there could be a bullish runway into next year.
Milk production would likely be below the average peak this season; milk flows for the first three months of the 202324 season were almost 2% behind on a tonnage basis, driven by lower North Island collections.
Raboresearch lowered its milk production forecast for this year for the Big 7 export regions.
Milk supply would likely grow by just 0.3% year on year this year, a downgrade from the bank’s earlier expectations of 0.5%.
Milk output from the Big 7 for next year was likely to climb by just 0.4%, far less than the annual average gain of 1.6% seen between 2010 and 2020.
Beef
The North Island bull price was in line with historical averages for September this year, with a slight lift above the five-year average by the end of the month.
Prices rose from $5.80/kg cwt in late August to $6.00/kg cwt by late September, in line with the normal price movements at this time of year.
Bull production was down 5% for the season to date, through early September this year.
Cow slaughter was up 4%, with a noticeable 10% increase in South Island cow slaughter season to date.
United States beef stocks made up mostly of imported product were 10% below the five-year average in August.
Lower inventory, plus imported lean trimmings trading at a large discount to domestically produced US trimmings, the market could correct itself.
This should provide positive support for New Zealand prices over the coming weeks.
August beef exports were higher by 4% year on year, driven by more shipments to the US.
Shipments to China, the largest market for August, were almost 40% lower year on year by volume.
Lamb
Lamb prices flatlined because of ongoing high volumes of Australian lambs in the global market and continued soft demand. South Island lamb prices tracked sideways through September at $6.90/kg cwt.
North Island prices moved upwards later in the month to shift the needle back to $7.00/kg cwt, up from $6.95/kg cwt.
Hogget and mutton slaughter numbers were close to last year’s volumes for the season to September.
China remained the top market, and demanded half of all New Zealand exports in August, just 3% lower than this time last year.
But the value of shipments to China plummeted by 25% year on year and proved the sway China held over price setting in the market.
Demand from key markets was stronger than this time last year, with exports to the US and the UK both higher year on year for volume (+28% and +50%) and value (+22% and +20%).
Across the ditch, sheep slaughter numbers remain historically high , up 51% year on year and up 17% on the five-year average.
The combination of late old season lambs with the drier conditions and falling prices are leading producers to offload stock earlier.
Consumer spending lifted in the US and so did market prices.
The average US lamb carcass price in September was 1% higher than the average in August and average lamb retail price was 1.5% higher.
Demand from alternative markets to China helped establish a firmer price floor in the face of high production volumes from Australia.
Fertiliser
Month over month, the Middle East reference for urea dropped 2.5%, Morocco DAP showed a positive 4.5%, and Canadian potash was virtually steady. The downside for farm inputs is coming from stronger petroleum prices and a weaker Australian dollar.
India surprised the market with consecutive urea tenders, but the volumes and prices were below expectations. India’s September tender offer was 3.6m tonnes, but only 0.5m were procured, and the price was lower earlier expectations.
The agrochemical front mirrored the fertiliser market but with a substantial lag.
Comparing a basket of herbicides, fungicides, and insecticides, Chinese prices dropped by 30% year on year.
This was already seen at the farm-gate level, especially for more in-demand products like glyphosate.■