By Annette Scott and Gerald Piddock.
The earliest spring pasture flush in recent years across large parts of the country, coupled with rising processor schedules, has created the perfect storm for the store cattle market.
The sudden price spike in store values at saleyards, especially in the South Island, has been influenced by the autumn drought that brought good numbers of both prime and store cattle to the market, PGG Wrightson livestock manager Joe Higgins said.
“There’s also been minimal numbers of beef cross calves retained in the dairy industry and there’s no doubting the recent strengthening in the market has been fuelled by confidence from the surge of early spring pasture growth.”
Most processor schedules are $1.10-$1.25/kg stronger than a year ago, hovering around the $7 mark.
“This would be the best store beef prices I can recall for this time of the season.
“There is positivity; farmers are sitting in pretty comfortable. The market has reached its pinnacle and holding.
“I wouldn’t like to say whether it’s market or procurement driven, but the positivity is there so we’re good to run with that,” Higgins said.
Hazlett livestock manager Ed Marfell said the early spring pasture flush coupled with the large number of calves that went to the North Island earlier, clearing out the yearling stock numbers in the South Island, has impacted the market.
“A lot of calves left Canterbury with the autumn drought, and we have certainly felt the recent buying power of the North Island pushing exceptional prices across the board and above expectation.
“We have seen huge inquiry from the North Island for young stock and two-year cattle and once they cross the water they don’t come back to the mainland.
“These are not one-off sales, these hyped sales have been going for a month or so and while the market down here is strong, we are not at the level of the North.”
The agents said the margin would be reasonable for farmers selling prime stock at $7/kg and who have done their sums; they can afford to buy replacements, despite the inflated store market.
“Farmers want something to eat the grass and make money and if replacing killed prime stock it’s not a problem, it can be justified paying in the current store market.
“If not replacing sold prime stock, it could be more of a gamble for later on.”
According to NZX data, growth rates in Canterbury for the August–September period have been above average while the rest of the country is similar to previous years.
Waikato-based PGW agent Vaughan Larsen described the prices at the weekly cattle sale at Frankton as “ballistic”.
“In the last two months, there doesn’t seem to be anything holding it back. It’s a perfect storm for the store price.”
Heifers are selling at $4.55/kg LW, which equated to over $1000 for a 250kg animal, 430kg two-year heifers averaged $3.58/kg, up around $1/kg LW on 12 months ago.
It is not just store prices. The prime market remains strong and the price for manufacturing beef from cull cows is also high.
“It’s across the board, there doesn’t seem to be a hole in any of the markets.”
AgriHQ senior analyst Mel Croad noted in the latest Livestock Outlook report for September that farmgate beef prices for bull, prime and local trade are sitting at record highs for this time of the year.
AgriHQ data shows that due to the lack of killable cattle through winter, prime and local trade prices have lifted by double their usual amount since June.
“This boosted confidence and it’s clear there is a lot riding on the beef job to hold up through spring to ensure on-farm returns are met.
“Although we have very strong prices now, the general trend is for slaughter prices to seasonally ease as we get closer to summer.
By how much will be determined by export demand and how quickly spring cattle supplies build, Croad said.
“We can’t overlook the fact that much of the recent upside has been driven by a lack of cattle rather than soaring export demand.”
