Anyone wired in to sell cattle during winter/spring has raked in record-breaking prices, whether that’s selling store or plugging finished stock into processing plants. Grass has clearly been a major factor, exaggerating processor shortages and in turn pushing schedules higher. This and an early “spring grass market” have sent store cattle silly too. 

But strong export returns from the United States have allowed processors to offer good money as well. The question is how much longer can we expect the US prices to stay afloat?

If we rewind a few months, back-to-back years of drought meant the US walked into 2024 with the smallest breeding herd since 1941. Combined cow and replacement heifer numbers dropped to 46.5 million, down 4.5 million from the start of the decade. 

Since bull farming is a rarity in the US (less than 2% of the total cattle kill), there’s a major reliance on cows to supply the lean grinding beef used in making beef patties. With the drought over, suddenly the number of cull cows arriving at the US processors fell sharply, creating major shortages and sending prices for fresh US lean grinding beef to all-time heights. 

However, there’s a second side to this story that’s slid under the radar – how much beef is being shipped to the US. It’s not surprising that Australia is funnelling much more beef into the US. Its herd is well and truly rebuilt and its cattle kill is flying at the quickest rate since the big droughts in 2018/2019. 

This is a major reason why frozen imported beef (that is, what Australia and New Zealand supply) has traded at a big discount to equivalent fresh beef from within the US, especially since not all US buyers are set up to use frozen beef.

But Brazil has been a bit of a wildcard. It was always going to cash in on the strong demand too – though it operates under a restrictive quota. Tariffs jump to 26.4% for any beef sold beyond this limit. Usually, this squeezes most of its US sales into the start of the year. However, with its main buyer, China, in a weak position, Brazil has kept sending boatloads of beef to the US even after the tariff-free quota was filled.

In total, US imports of frozen boneless beef from Australasia and South America through January-July were the highest since 2015, up 119,000 tonnes or 44% versus only a year earlier. The lift is even sharper when you include other cuts of beef.

When you map those US beef imports against their cow/bull production, suddenly there’s a 6.5% lift in manufacturing beef traded versus last year. Admittedly, total beef inventories in the US at the end of July were low compared to the past decade, but it shows that demand has been just as important as supply when it comes to driving prices higher.

And this is where it gets interesting. Over the past few weeks, the US imported beef prices have been strong, but with limited upside. Labor Day in the US (the first Monday of September) is the traditional marker for when demand for grinding beef starts to slow and cow production starts to lift. Whether the prices can hold with the current amount of beef on the market is debatable, yet we’ll have a lot more to sell into the US between now and Christmas as our cattle kill picks up steam.

It’s been a wild few years for global sheep and beef markets. The big reset that we went through a year ago caught everyone through the supply chain off guard and we’ve been feeling the pinch ever since. 

But it’s not all doom and gloom out there. The room for improvement is certainly significant in China, but both beef and lamb sales into developed markets such as the United States, Europe and Japan have provided a little spark in an otherwise dull landscape.

One point that’s cropped up in conversation for people at all points in the supply chain is how much this season feels like a throwback to around 2017/2018. And perhaps that’s the period we should use as a reference to understand how the coming year and beyond may pan out.

New Zealand sheep and beef exporters haven’t had a “normal” trading year since 2018. 

It all began with the African swine fever (ASF) outbreak in China. What followed was the mass culling of pigs, escalating Chinese pork production in 2018, only for these volumes to bottom out 24.1 million tonnes or 37% below those peak annual levels just two years later. Chinese pork output only recovered to pre-ASF levels last year.

This outbreak and the following concerns about food supply sparked the initial surge in buying from China, in turn lifting livestock values in New Zealand. In the space of a year, the share of New Zealand beef exported to China jumped from 26% to 46%, with lamb also rising, from 36% to 45%. Admittedly, some of this was driven by speculators who believed they could ride the market upwards.  

There was always bound to be some market realignment as China rebuilt pig numbers, but as we all know covid muddied the waters further. Rather than tame buying, global production and logistical issues created artificial shortages in all markets. 

Combined with various governments issuing massive stimulus cheques, this sent export prices to exorbitant levels in the early 2020s. Over time importers built up expensive inventories they eventually started to struggle to sell. These past 12 months have been the hangover from that party.

As the dust settles, our trading patterns are increasingly switching back to what we saw in the late 2010s. Exporters are spreading sales into a wider variety of markets, with China reverting to taking the lesser-quality cuts it was previously known for. 

With the selling focus shifting back to the likes of the US and Europe, more emphasis has been put on creating value-add products within New Zealand too, mainly through producing more chilled or boneless cuts. 

Because of this, lamb slaughter prices are likely to return to peaking in line with chilled Christmas production, rather than the later or extended peak that Chinese New Year buying has caused in recent years.

Locally, the big change has been the ease at which farmers can get stock into processors. It’s no secret that the major slaughter backlogs generated through the covid years kept a lid on what processors had to pay to source stock. Now that overseas workers are more readily available, staff absenteeism rates are well down, and other sectors aren’t competing for staff as heavily, all processors can churn through stock more readily, to the point where backlogs have been a rarity. The fact there’s been next to zero overhang of cull dairy cows into winter is one example of this.

That’s caused a switch to a more traditional winter slaughter market this season, where capacity has easily outnumbered the volume of finished stock available. Processors have tried to manage this by shutting chains earlier and for longer. 

Regardless, procurement competition has returned, underpinned by local trade processors, causing slaughter prices to lift irrespective of what’s occurring in overseas markets. Low livestock numbers nationwide are exacerbating this situation too. 

This article was written by AgriHQ analyst Reece Brick. Subscribe to AgriHQ reports here.

It’s been a year to forget for the industry. Everyone’s squeezed between rising costs and less money coming in, with Mother Nature putting the boot into parts of the country that haven’t seen enough rain this year. 

The industry is well aware that we need to get a lot more cash into schedules, especially lamb and mutton, or the sector will continue to struggle and shrink. The question is whether that’s realistic before we reach next year.

The No 1 handbrake in terms of overseas markets is China. It’s a problem for the sheep industry since it takes the bulk of our lower-value cuts, and few viable alternative markets will take these cuts, at least in the volumes we need. 

For beef, we rely on China to pick up a lot of prime and secondary cuts, which are key for driving revenue on steer and heifer carcases. The United States beef market can be just as big in terms of pure volume, but it mainly takes grinding beef and trimmings, which mostly support bull and cow values.

Unfortunately, we’re yet to see any sign of improvement from China, to the point where it wouldn’t be surprising if we’re in the same position six months from now.

If anything, sentiment towards the Chinese market has worsened following a recent major food expo. Key buyers have reaffirmed that consumers are reluctant to spend while confidence in the economy is low and the property development sector keeps folding in on itself. 

There were already signs of this beforehand as lamb exporters reported slightly weaker prices on key cuts, even though our lamb kill is winding down. The lifting exchange rate hasn’t helped anyone’s cause, chewing 5% out of NZ dollar returns over the past six weeks.

The supply side of the equation doesn’t help the outlook into China either. South America shipped a record 643,000 tonnes of beef to China through January-April. To give an idea of the scale, our exports to China over that time were only 63,500t. 

Although South American beef doesn’t directly compete with us, its presence does have flow-on effects for lower-value cuts. 

Brazilian beef production is forecast to decrease going forward, but it’s unlikely the flow of beef to China will slow. In March, 24 Brazilian beef processing plants gained approval for export to China, and plans have been announced to fast-track the approval of others that didn’t make the cut in the first round. 

All of this is in addition to five key Australian meat plants also regaining access, which had been blocked in 2020 following a spat between the Chinese and Australian governments.

The torrent of lamb coming out of Australia doesn’t help the forward outlook, although New Zealand exporters have reported lifting prices in the European Union and United Kingdom, where we are partially sheltered from Australia due to either a better free trade agreement (the EU) or because the smaller size of our lamb suits buyers better (the UK). 

Since data has been available, Australia’s weekly lamb kill (excluding Western Australia) had only broken 420,000 six times before this year. It’s gone over that in seven of the past eight weeks. 

While this could mean this season’s lamb kill is burnt through quicker than expected, it’s reported that scanning results have been very high in key sheep-producing areas, so next season will likely see more of the same.

Obviously pulling in more money from overseas would help New Zealand farmers, but higher operating costs and general inefficiencies in our processing sector are keeping cash from flowing to the farmgate too. 

For example, through the first half of 2018, lamb was selling overseas for a little less than what it’s made this year, yet schedules were around $1/kg better back then. Admittedly that season was a poor year for meat company profits, but it gives a rough indication of how value is being lost along the supply chain.

This article was written by AgriHQ analyst Reece Brick. Subscribe to AgriHQ reports here.

Unlike last year, finishers intending to carry stock into winter and beyond will be in the driver’s seat this season when it comes to squeezing money out of processors. That’s not to say prices will shoot off to great heights, but the slaughter prices should at least push above the benchmarks reached during July-September last year.

There are a few reasons for this more positive outlook, short supplies being the major factor. Lamb kill tallies from late November to early April (which excludes almost all old season lambs) have pushed well above last year – up 410,000 or 12% in the North Island and 353,000 or 7% in the South Island. 

By all accounts this difference has grown in the weeks since. That leaves a hole in the winter kill roughly equivalent to approximately three weeks’ production in both Islands. 

Changes in the lamb crop could partially fill these gaps, but the wider industry is increasingly doubting forecasts that more lambs were born last spring. And these could be irrelevant for the South Island’s winter kill since the bulk of the remaining lambs are housed in Southland, where stock is usually offloaded pre-winter. Canterbury finishers have battled to get winter crops growing, too.

Processors are expecting cattle to be harder to find this winter as well. The main pinch-point will likely be on manufacturing-grade cattle (that is, bulls and cows). The premium paid for beef-cross dairy calves has meant more of these have been reared in recent years in place of the traditional Friesian calves, impacting the number kept as bulls. 

Nationally, processors killed the fewest bulls in seven years through October-March, with the North Island kill through January-March the lowest since 1999.

Usually processors would be chocka with cull cows by now too, but they’ve definitely not caused the usual wait times for cattle finishers this year, especially in the North Island. 

More supplementary feed around, a better milk price outlook, and smaller base dairy herd all seem to be keeping more dairy cows on farm, though the main driver is likely the decrease in cow empty rates – 15% this season versus 16.7% last year according to LIC/DairyNZ.

Export markets are providing some reason to be more optimistic. Neither beef nor lamb prices are likely to shoot upwards, but the market conditions are much more settled than a year ago when building negative pressure in China and Europe resulted in prices crashing through early winter.

United States manufacturing beef prices are the main beacon of relief. Heavy supplies entering from overseas are taking the edge off prices, but this has been more than counteracted by shortages in the US cow kill – not to mention the low exchange rate is keeping returns in NZ dollars near record levels. 

Although prices here have started to level out, plenty of exporters have reportedly forward-sold large volumes at these high prices, which should secure farmgate prices over the next few months. 

Other cuts of beef into the Asian markets aren’t firing to anywhere near the same extent, especially in China and South Korea. But there’s at least some relief that the majority aren’t showing any resistance to current prices.

Lamb cuts into Europe and the US are performing relatively well, at least compared to when the market was at its worst, but exporters need China to perk up considering there’s few alternative markets for most lamb cuts they purchase. 

This hasn’t been helped by Australia continuing to push record volumes of its lamb into its main markets – China, the US and the Middle East. 

The forward outlook for lamb is mainly stable, though with the number of lambs Australia has burnt through these past months, we could finally start to see less negative pressure from its presence.

This article was written by AgriHQ analyst Reece Brick. Subscribe to AgriHQ reports here.

Export log markets rolled through late spring and summer in a much healthier state than was witnessed in the five months prior. Over that time prices for A-grade logs at the wharfgate shifted from an average of $93-$115/JASm3 – roughly equivalent to a per-tonne price – up to $120-$135/JASm3.

While this may not appear like a huge swing, it makes a significant difference to the bottom line once harvesting and transport costs are taken into account – particularly for those in the South Island, who are paid less due to the higher cost of getting ships into port.

Unfortunately, these lifts were always built on rickety foundations and prices have begun to weaken since. While there are vessels delivering logs to the likes of South Korea, Japan, and India, combined they pale in comparison to the volumes taken by China. 

And the lift in the market through the back end of last year was almost all based on fewer log shipments making their way to China, rather than an improvement in underlying demand.

Through November-January, China imported only 5.6 million tonnes of softwood logs (pine and similar varieties), 3.0 million tonnes under the average over those months in the previous five years. 

The massive drop in supply mainly came from fewer logs entering from Europe, partially due to issues with the Suez Canal making transport too costly, though both North and South America have been quiet too. 

New Zealand is one of the few markets that has upped its supply over recent years.

But our rush to capitalise on the firmer market meant we shipped a record volume of logs to China in February – 2.08 million m3 – and in the process twisted the market from undersupply back to oversupply. 

The fall hasn’t been overly harsh yet, around $10/JASm3 as of mid-March, but it is a little concerning given the market has usually tracked sideways or upwards between February and March over the past 10 years.

It’s not all about supply, though, as all indicators point to log usage within China remaining subdued over the coming months, potentially for the full year. 

Earlier this month China Vanke, the second-largest property developer in China last year, had its credit rating downgraded to “junk” due to doubts about its ability to pay short-term debt requirements. 

Another big developer faltering isn’t anything out of the ordinary based on the past three years, but there was a perception that this developer was more secure due to having government backing.

Real estate construction in China fell to the lowest level since 2007 last year at 954 million m2. Through 2018-2021 this was consistently 2.0 billion m2 and 2.3 billion m2. 

New Zealand log suppliers aren’t as exposed to China’s property sector as in the 2010s. However, these issues are significant in terms of investor and consumer confidence and therefore cause ripple effects across all sectors of the economy. 

One example of this is the fact that personal savings within China recently reached all-time highs. 

Locally, it is all a lot less dramatic. Mills have reported a much smoother start to the year for timber sales, helped by the fact that many have managed to sell down stocks that were stacked on-mill through much of last year. 

With this said, there’s unlikely to be a jump in demand anytime soon based on an even slower start to the year for new housing consents – though the reduction in windthrow logs being harvested through the central Plateau will ease supply through this part of the country.

After a tough few years for calf rearers, to the point where some large-scale operators have abandoned the trade, it’s great to see those that stuck it out finally receiving good money for their calves.

Of course, costs haven’t come down, and reliable labour has remained difficult to secure. But the prices paid have consistently floated around record levels – unlike any other class of livestock throughout the country. 

This spring the North Island yards have seen $20-$30 more paid than last year on 100-130kg lines. Friesian bulls have averaged $533, though they’ve typically been a little stronger in the paddock.

There are a few reasons behind the development of this trend. One is the simple fact that fewer calves were reared, especially those that were born later. This mainly applies to the South Island, whose bobby kill was up 50,000 head on last year. 

But that has flow-on effects for the North Island, given a large number are usually traded over the Cook Strait in their lifetime. 

It is worth remembering that changes in Fonterra’s on-farm euthanasia rules would have had some influence on these tallies. The national dairy cow herd has gradually shrunk over recent years too, so the larger number of calves bobbied likely comes from a smaller base of calves born.

Changes in farming policy seem to be another driver. The lack of confidence around lamb markets this summer and autumn has pushed a portion of buyers away from store lambs, with 100kg calves considered a good alternative due to the low per-head pricing compared to older store cattle, but also because of the greater flexibility in terms of when these can be traded out – either as store cattle over the short to medium term, or by being taken to finishing weights for a longer-term trade. 

Poorer milk pricing and increasingly tough farming regulations are pushing more properties away from dairy farming into drystock trading too, adding the odd extra calf buyer into the mix.

A good spring for grass growth can’t be ignored either. Not only has this meant more people have been looking to add mouths to paddocks, it’s also supported pricing on yearling cattle. And prices paid on yearlings affect budgets for buyers entering the 100kg calf market for replacements.

Another interesting trend is the gradual disappearance of the straight Friesian bull. The latest published statistics show that only 25% of New Zealand’s recorded dairy cow herd is considered Friesian, down from 33% five years earlier. Both these and other straight-bred herds have slowly been replaced by the popular Friesian-Jersey mix, which now accounts for 59% of dairy cow numbers.

Given that Friesian bull buyers are quite selective against lines showing Jersey genetics in their markings, more dairy farmers are switching to using beef sires to support the value of their calves. This has become more viable since the live export ban, too, as it’s easier to source replacement dairy heifers that would otherwise be shipped to China.

This has been clear in the North Island yards that AgriHQ regularly collects data from – the number of Friesian bulls sold through to early December was only 6100, down from 8000-11,100 through 2016-2021, whereas beef-cross calves of all sexes came to 7900, essentially unchanged from normal.

This year is going to go down as one of the toughest in a long time for the wider forestry industry. Wounds are slowly healing after a brutal first half of the year, but the fact is no one is over the moon about the present state of play, and there’s little on the horizon to suggest a return to the good old days any time soon.

There are a lot of moving parts, which explains why profits on logs and timber have dropped off big time, but if there’s an overarching theme it’s the health of the economy both here and worldwide. 

Historically, this is often the case when it comes to wood markets. Underlying demand is highly reliant on construction activity, and the choice to build by companies or the general population depends on a perceived level of financial security going forward.

Here in New Zealand the big killer is interest rates and their effect on house values, as well as the much higher cost to build than only a few years ago. 

The number of new home consents issued this year dropped 26% versus last year through to the end of August, with this deficit expanding as the year has progressed. This has left mills battling to sell structural and framing timber, often resorting to cutting production or selling timber overseas to try to rebalance the market. 

It’s a similar story for roundwood producers, where forecasts of a tough farming season have already seen spending tightening on posts and poles.

While it looks like mortgage rates aren’t going to ease over the short term, the pure need to house a growing population could be the counterweight to eventually reinvigorate construction activity. 

Since the turn of the century a new house has been consented per every 2.1 people added to the official population count. In the first half of this year the ratio had expanded to one consent per 3.4 people. In other words, building activity is approximately 37% lower than would be expected over the long term – although this comes with the caveat that 2021 and 2022 saw high construction rates and a steady population.

Overseas it all comes down to China, which buys a little under 90% of the logs that are exported from New Zealand. Log traders and harvesters are used to a few swings up and down through the year, but we’re about to head into a seven consecutive month of export log prices being below the 10-year average. And the cost of getting a tree from woodlot to wharfgate has risen significantly over that decade.

Economic troubles in China are definitely limiting demand for NZ’s logs. What makes it worse is that much of the economy’s woes are tied to numerous high-profile, large-scale property development companies flirting with bankruptcy for two years straight.

Chinese consumers’ confidence in this sector has fallen away massively as a result, and with that construction activity has massively slowed. According to data published by the Chinese government, the number of new houses under construction has fallen by a quarter versus last year and is less than half of what was being constructed each year between 2018 and 2021.

Luckily, NZ traders have managed to dodge the worst of this impact. A shift in log usage trends has partially sheltered the market, with other avenues, like Chinese furniture production, making up a larger portion of NZ log usage than in the past. 

Also cushioning the blow has been the massive drop in shipping costs, now essentially half what they were through 2021 and much of 2022. As well, China is much more reliant on NZ for softwood log supplies than in pre-covid days. Our market share has slowly lifted to 55-65% over the past two years, having traditionally ranged between 35% and 40% in the late-2010s and the start of this decade.

This article was written by AgriHQ analyst Reece Brick. Subscribe to AgriHQ reports here.

It’s a strange old time for both sheep and beef markets. 

Plenty of people were banking on schedules doing their traditional lift through winter, which definitely wasn’t a bad call in autumn, when a lot of store stock were being bought for this trade. Back then China appeared to be coming out of lockdowns with a bounce, the United States was running short of its own cattle supplies, and European lamb buyers were more active than expected, which all boded well for future farmgate prices.

But it’d be safe to say things have turned sour over the past six weeks, especially since mid-June. Processors have taken significant cuts out of lamb and mutton and are slowly chewing away at almost all cattle classes too.

AgriHQ has been collecting lamb slaughter price data since 1996 and since then prices have only once come back in winter. That was in 2003 when lamb eased only 10 cents to $4.25/kgCW – which is $6.90/kgCW in today’s dollars when adjusting for inflation.

So what’s going on?

The main source of pain is China. It was key to pushing beef, lamb, and mutton prices to brand new heights through 2021 and 2022, but it’s starting to look as though it was a bit overenthusiastic.

Commentary from all quarters points to an overabundance of expensive product held up in inventories over there – and traders are struggling to sell it without taking losses. Those Chinese traders are therefore reluctant to buy any extra volume beyond what they already have and are willing to do so only at cut-rate prices. Exporters here and abroad are even having to renegotiate prices once containers full of meat are landed in China.

It’s easy to see how this situation has developed when you look at China’s import data, at least for beef. A record 2.8 million tonnes of beef was imported over the past 12 months, an extra 500,000t on top of last year. Before the pandemic this had never gone over 1.7 million tonnes, though some entered via the grey trade that doesn’t show on official figures. 

This past year’s number would’ve been even higher had Brazil not been cut off for around two months due to an atypical mad cow disease case. It’s unlikely this latest flood of beef into China will slow much over the short term, given what we’re hearing from overseas.

Another factor that gets overlooked somewhat is the pork market. This can be a major driver of consumer trends as it’s China’s default meat choice. Pork prices went through the roof in 2019 when African Swine Fever (ASF) ripped through China and killed off supplies. However, now the situation has mainly settled down, live hog prices there are leveling out to pre-ASF levels. That’s about half the price of 2020.

Market troubles aren’t limited to the red meat sector, though. You can name almost any commodity that trades into China – logs, wool, dairy products –  and virtually all are having a tough time. So while supplies are definitely a key part of the equation, such a universal shift points to economic issues being just as influential.

Key consumer spending metrics during China’s latest public holiday came up short of pre-pandemic levels. And other data points, such as home and car sales, have been slow since before that. A lot of China’s economy is based on its property development sector, which has now been in rough waters for almost two years. Only recently a large property development project didn’t sell despite being offered at 20% of its appraised value. Likewise, news has emerged that another major state-backed property company has reportedly run into cash-flow issues.

This article was written by AgriHQ analyst Reece Brick. Subscribe to AgriHQ reports here.

For forestry and wood markets as a whole, this year has been one of the tougher ones on record, bringing with it a lot of the same problems that were plaguing the trade last year. 

An extended rough patch wasn’t completely unexpected – wood markets are mainly dictated by construction rates, which themselves are dictated by economic outlooks. And those outlooks have been poorer for a while now.

When it comes to logs, the obvious place to start is China. In the past 12 months it has purchased 89% of New Zealand’s log exports. While buyers there did come back from the Chinese New Year with a zing in their step, that was short lived as it sent log prices out of kilter with what mills there were receiving for their lumber. The end result was a swift correction going into this month, bringing the price for logs landed in China down to their lowest since early-covid days.

A few in the industry had picked this before it happened. China’s property development market has been in a spot of bother for a while now, with a number of major companies barely skirting bankruptcy with the aid of the Chinese government. 

In 2022 the amount of starts on new property builds in China was 39% down on the year prior, which was already lower than at least the three years beforehand. This was largely responsible for log prices into China losing value step-by-step throughout last year. For the first four months of 2023, property starts are down an extra 20% from last year.

A new potential pressure point could come from Australia too. Before 2021 they used to supply a little over 10% of softwood logs into China but were banned from that point forward after the Australian Government criticised China’s response to the covid outbreak. However, this ban was listed in mid-May.  

One thing that’s smoothed the ride down at the NZ end of the supply chain is shipping costs. From mid-2021 to mid-last year these were at their peak and took around a 40% bite out of the money exporters were getting paid by Chinese customers. 

But these costs have almost halved since August, only holding a little above historic norms since the start of the year.

Locally, there’s been little for the industry to get excited about either. Constant interest rate lifts and the subsequent cooling of house prices have really popped the bubble in demand for timber that developed through 2021. 

Given input costs have risen for mills over this period too, many are trying to manage the drop-off in orders by cutting back output. Others have sold excess timber at discounted rates to overseas buyers to try to re-balance the market, though challenges in getting shipping containers have made this more difficult than otherwise would be the case.

As a whole, there’s yet to be a major change in log prices into local mills, though. The structural and industrial grade logs are likely to come under more pressure going forward given the aforementioned housing issues, plus extra supplies coming on the market as efforts are made to recover trees in the central plateau felled by Cyclone Gabrielle’s winds. 

Pruned logs are more likely to hold up short term as these are often pulled from smaller scale forests, and owners of these are more likely to halt harvesting while export markets are poor.

Carbon markets have dropped significantly lately too, mainly due to uncertainties around future changes to the scheme, specifically how exotics forests will fit in long term. The market peaked at $88/NZU in November last year but has settled to the low-$50 range since the start of the month, the lowest since mid-2021.

This article was written by AgriHQ analyst Reece Brick.Subscribe to AgriHQ reports here.

It’s been a game of two halves when it comes to this year’s store stock markets. In one corner you’ve had the North Island, where lots of rain has translated into lots of grass grown, sending the market into a buying frenzy over what’s been available. In the other is the South Island where it’s been the exact opposite, especially down south, with another dry season placing all the power with the buyers.

But all weather patterns come to an end eventually. La Niña, which was driving these trends, has slowly disappeared going into autumn and put the country in a more neutral state. Which is another way of saying the sun and the rain have been more evenly dispersed across the country and should stay that way for a little while longer yet.

The above, and a few cold mornings, have somewhat reset the store market in the past few weeks, which makes it a good time to assess how strong prices are and whether what we should expect going forward.

When it comes to lamb, the store market in both Islands is paying 47-48% of schedule. For the North Island, that’s about typical for this point in the season, bar April 2020 when covid and drought made for a tough time for sellers. 

The main difference is this usually this comes after a summer where lambs are relatively affordable, which was nowhere near the case this time around. Summer lamb buyers are often choosing to do fewer trades and are instead taking lambs to heavier weights to reclaim a margin. This may have flow-on effects further into autumn if they’re out of the market. 

This probably won’t warp prices to a massive extent, though, since lamb liveweights are above average, which will push a larger portion of lambs directly into the slaughter system rather than being routed through the store market first.

The short-term outlook for the South Island is stronger. Current pricing is a little higher than would usually be expected. But with a lot of vendors selling early due to the dry summer, winter croppers have little choice but to compete over the few lambs that are yet to come up for sale. At least one slaughter contract for late-autumn/early-winter has been released, too, which is injecting a bit of confidence into the market.

When it comes to R2 straight-beef steers, the money for sellers is looking tidy when married up next to schedules. Even with the recent weakening in the North Island market, R2 steers are the strongest they’ve been at this point in the year for five years at 56% of schedule. Again, this comes after an extended spell where R2 cattle have been much less affordable than usual. So while there may not necessarily be a big change in prices going forward, this makes it even more likely that prices will settle down further as we approach winter, something which is fairly standard through autumn.

It’s all quite similar in the South Island, where prices have been solid versus returns at slaughter, which will likely translate into a relatively normal run into winter for the store market – especially as good-quality straight-beef cattle have been hard to find for a while now, at least outside of calf sales where the market’s been strong as well.

This article was written by AgriHQ analyst Reece Brick. Reece’s reports provide key insights into what makes our sheep and beef markets tick. Subscribe to AgriHQ reports here.