By Reece Brick and Alex Coddington
The sustainability of the wider sheep and beef industry has been called into question in August.
Widespread stock shortages at all points along the supply chain have sent prices on an unsustainable upward trajectory. Inevitably, the extra money paid now during the traditional off-season will come out of markets when we reach the peak summer trading.
For processors, shortages have been noticeable through all livestock species, exacerbated by improved plant staffing/efficiencies versus previous years.
The national lamb slaughter in the four weeks to August 3 was 37% under last year, while total cattle throughput was down 27% on the same comparison. While last year’s kill was due to finishers trying to beat the market drop, this also reflects lower stocking rates nationwide, where the loss of breeding farmland to forestry conversions, a decline in dairy calf rearing, a contracting dairy herd, and heavy offloading of stock through drought-regions in autumn have all contributed to the shortages.
Beef + Lamb New Zealand’s stock number survey points to a 2.8-2.9% year-on-year drop in both breeding ewe and total beef cattle numbers.
The battle to find stock to add to paddocks has been evident in the store market too, where these shortages plus rising schedules and kind winter farming conditions have lifted store lamb values and sent store cattle prices to all-time highs.
Export markets for beef and lamb cuts have ranged from stable to firm. However, little has been traded considering processors entered winter with low inventories and are producing little at present.
Chinese buyers are starting to come to the table in preparation for the Chinese New Year, but other markets have been more stable and quieter.
Australian lamb production is amid a seasonal low; however, they continue to push the highest volume of beef to the US since 2015. The recent lift in the NZD:USD has reduced NZ dollar returns. Whether markets can handle paying current prices once we reach the peak trading season is too early to call.
More: Subscribe to AgriHQ Industry reports to receive the full report. Key points discussed in the August Sheep & Beef report include: beef insights from NZ, South America, Asia and Australia; NZ slaughter price trends here vs other markets; beef exports in NZ vs other markets, and lamb and wool trends in NZ and other key markets.
