North Island slaughter rates typically don’t bottom out until September, but this year supply has been tight since mid-June. With processors under pressure to meet orders, they’ve been increasing farmgate returns for prime cattle, and store market prices for yearling cattle have been lifting in tandem.
In the past six weeks, average paddock prices for heavy R1 steers in the North Island have risen from $3.80/kg to $4.20/kg, while prime steer prices have increased from $6.40/kg to $7.00/kg.
This has kept the store value of R1 steers at a normal range of 59-60% of the schedule. Though current cattle values are high, confidence in the market has previously pushed yearling steer values closer to 65%.
Milder winter conditions and early autumn destocking have intensified demand, making saleyards a preferred selling option. Most store trading now occurs at auction, above paddock values. The heat of the market has been a good incentive for some to tidy up numbers so while the volume of cattle in yards has been increasing through August, quality hasn’t quite been comparable to previous years in regions with early offloads and dry conditions.
R1 steers at Stortford Lodge were on average 40kg lighter than last year, Rangiuru 25kg lighter, and Feilding 12kg lighter. Prices at these saleyards are up 60-80c/kg compared to last year. Conversely, yearling steers at Wellsford were 43kg heavier on average, Taranaki 12kg heavier, and Matawhero 18kg heavier, with prices up 30c/kg to 68c/kg. Frankton saw the smallest weight change but the largest price increase, up 87c/kg from last year.
For some, the lifts to the store market have been too hot, too fast. Feilding has been in a league of its own when it comes to yearlings, with an average price this month of $4.44/kg, or 63% of the schedule, followed by Stortford and Taranaki at $4.36-$4.37/kg, and Wellsford at $4.00/kg.
The astounding per-head prices required to secure replacement cattle now have a fair amount of people holding on to what they have, as long as weather conditions allow, only adding to market supply pressures.
Where to next for store cattle prices will be largely dependent on domestic supply moving forward. With so much pressure still on the procurement of finished cattle, there is no doubt processors will be looking to balance out losses when numbers better match capacity. In other words, current store cattle prices are relatively in line with schedules but don’t match up with current market signals.
Although the United States remains hungry for beef, a strong presence in this market from Australia and Brazil is rectifying these shortages. Economic downturn has put China’s demand for beef on the back burner, while its own low domestic meat prices have kept demand from our once-largest consumer below average all year.
With high spring prices brought forward, there is an increased risk of an early change in direction if and when numbers pick up. Assuming store market values stay in line with farmgate prices, there is a likelihood of store cattle values falling almost as quickly as they rose.
This month’s North Island Livestock Outlook report forecasts prime steer schedules to drop 40c/kg more between October and January than it did the same period last year. For more in-depth analysis on global red meat markets and farmgate price projections for the next six months, sign up to Livestock Outlook, August issue out now. Visit agrihq.co.nz/livestock-reports
