Uncertainty surrounds the short to medium term future of New Zealand livestock markets

Store lambs have shot up in price, but still well below last year's value.

Despite some strong positive signs, uncertainty surrounds the short to medium term future of New Zealand livestock markets.

Independent Whanganui livestock commentator, farmer and livestock trader David Cotton said the market, both store stock and export, continued to improve over the past two weeks, but longer term was more difficult to forecast.

"I guess we must count our blessings with the sale yards operating and meat companies killing our livestock industry is turning over nicely compared to tourism, hospitality, and the wool market. Wool is showing the lowest prices, I think, in history," Cotton said.

David Cotton

"Store lambs have shot up to $3.50/3.60/kg live weight - great news for vendors, but still well under the $4.30/kg/4.50/kg paid this time last year, which is interesting when comparing the schedules being paid.

"Prime lamb is solid at $7/kg/7.30 kg v $7.70 last year, mutton $4.90/kg v $ 5.30/kg last year and prime cattle $5.30/kg v $ 5.45/kg.

"The market last Friday at Feilding took the usual big lift on the better lines of SIL [scanned in-lamb] ewes with the top lines all breaking the $200 mark.

"Store cattle have also taken a major lift over the last couple weeks, but still tracking well below last year's values, again interesting when you compare the similar schedules - the difference in my view being feed levels and market confidence.

"The only certain thing I can report is the uncertainty of the markets for the next 6 -12 months. My normal saying "tell me the weather, I'll tell you the markets" has gone out the window. There are just too many variable factors influencing the market place."

Cotton cited:
· Covid
· NZ exchange rate
· Overseas market requirements
· Buyer ability to pay
· Confidence
· Political interference
· Political uncertainty – USA/China

"We do, however, have some strong positives. Thankfully we seem to have a meat industry where companies are holding strong balance sheets and record low interest rates are another positive.

"With large numbers of capital livestock killed over the drought period and record low scanning rates, there will be another large drop in livestock numbers available to be traded next season.

"I'm hearing reports out of the bay [Hawkes Bay] of scanning rates down 30 per cent on average."

And on the weather front, Cotton said it doesn't rain, it pours.

"That's certainly been the case on the east coast side of the island. We, on the other hand, have enjoyed a bit more evenly spread rain over June," Cotton said.

"We are still well behind our average rainfall for the year, so you can see why the dams are low when you look at the stats. Every month of 2020, Whanganui received less than its average rainfall, but we have also enjoyed winter days of 18-20C with ground temperatures between 9-10.5C ensuring the grass is still growing."

Meanwhile, a recent industry seminar he attended threw up some interesting food for thought.

"I attended an excellent presentation on the farming industry by Baker Ag (Feilding) last week where one of the standout items was the income from forestry/carbon farming on Class 6 and 7 land.

"With ever-increasing costs to farming harder hill country it's hard to ignore this option in land use. I can't see how a sheep and beef farmer will compete in purchasing that class of land, but that's another story."