Sheep and beef outlook: Strong meat prices offset wool price concerns
The weather in the coming months will once again play a pivotal role in the sheep and beef sector.
Industry body Beef + Lamb New Zealand says livestock entered winter in good condition, though winter delivered a cold but well-managed period in late July and early August, with snow falling to low levels, particularly in the South Island.
“Overall, if there is a mild spring, expectations are for an excellent lambing,” Beef + Lamb New Zealand chief economist Andrew Burtt said.
He said livestock prices for the farming year ending June 30 were excellent.
“At the end of last season, wool prices were excellent in May and June, but early-season wool sales in July saw wool prices drop significantly.
“This leaves concern about wool prices for the rest of this farming year, though overall season-average prices are likely to be above those of the previous farming season.”
Burtt said the overall outlook for meat prices in overseas markets is for them to remain generally strong this season, although they are expected to ease back from the peaks reached last season.
“This leaves a reasonably good outlook for prices back in New Zealand, though a firming exchange rate would trim returns in NZ dollar terms,” he said.
“A 5% appreciation of the NZ dollar for lamb would lower farm-gate lamb prices by around 6.5%.
“Keep in mind that 90 to 95% of meat production is exported, with 30 to 40% of the value added from farm gate to export through the manufacturing and processing sector.”
For the current market, Burtt said August prices for prime stock had been strong.
“Companies have signalled that prices will ease from their current levels, though indications are less clear as to whether this will be a gradual easing or a steeper decline.”
Lambing season
Rotorua-Taupō Federated Farmers meat and wool chair Ruby Mulinder said that, numbers-wise, the lambing season was looking good.
“Ewe scanning has been positive in most regions,” she said.
“Plenty of scanning results are greater than 170%.
“However, we are still seeing some farmers not scan for triplets, with all multiples recorded as twins, which does not reflect the true number of lambs on board.
“Some don’t want to know about triplets because they can be hard to manage and capitalise on.
“I see a real opportunity for the sheep sector in scanning for triplets.”
Either way, Mulinder said this information was powerful.
“If farmers can’t feed them adequately or provide the additional support required, there is the option to sell these animals to better-equipped farmers.
“Culling poorly conditioned or lightweight triplet-bearing ewes after scanning can minimise ewe and lamb wastage and help mitigate potential welfare issues during lambing.
“If you are having a good season, then you can explore ways to better capitalise on these triplet-bearing ewes.
“But without this scanning information, you can’t pull these levers.”
Mulinder said setting ewes up to milk well was fundamental for early lamb weight gains.
“With a possible dry summer on the horizon, we should be focused on growing lambs now, which means feeding the ewe well during peak lactation.
“If feed becomes tight, early weaning of lambs is also an option to ensure your best grass can go directly to the lambs, especially when ewes and lambs start competing for the same blade of grass.”
Earth Sciences New Zealand and MetService meteorologist Jon Tunster said the El Niño weather pattern was declared in early July and had continued to strengthen since then.
“This means more westerly-quarter winds, from the northwest through to the southwest, than normal across the whole country,” he said.
“During spring, we already see a dominance of westerly wind flows, so we are effectively anticipating an enhanced and likely prolonged spring.”
Tunster said that while the Bay of Plenty and Wairarapa would most likely trend drier through spring and early summer regardless, it was less clear whether areas such as Waikato, King Country and Taranaki would trend wetter or drier.
“Essentially, it will depend on the nature or flavour of the westerly flows that affect us,” he said.
“Some scenarios have high-pressure systems sitting closer to the North Island, which means fronts will be relatively weak by the time they reach these regions.
“However, there are other scenarios in which the high pressure sits farther away and more vigorous fronts can maintain their strength as they move across the North Island.”
Tunster said people should be on the lookout for stronger winds than normal, which were likely to accentuate drying in areas experiencing reduced rainfall.
“Coupled with occasional bursts of warm or hot conditions, the fire season is already showing signs of concern, so it will be worth keeping up to date with any advice from Fire and Emergency New Zealand.”