Dry weather and weak dairy prices beef up seasonal slaughter rates

Total New Zealand cattle slaughter for January increased by 18 per cent, year-on-year, to 285,588 head, with cow slaughter over the same period surging by 55 per cent. Photo / Alan Gibson

Dry weather and weak dairy prices underpinned higher beef slaughter rates in the first quarter, driving prices lower, but they remain strong by historical standards, Rabobank said in its quarterly beef report.

While higher domestic supply has led to a fall in farmgate prices, very high supplies from Australia have also contributed to lower prices.

North Island bull prices in the first week of March averaged $4.90kg (carcass weight), down 11 per cent from the record prices at the end of 2014, but 29 per cent higher than the same week last year.

Imported US beef prices have also eased throughout the first quarter with benchmark 90CL prices averaging US$2.12 ($2.78) a pound, although a 12 per cent depreciation of the Kiwi dollar against the US dollar since March 2014 had ensured prices remained above last year's levels.

Total New Zealand cattle slaughter for January increased by 18 per cent, year-on-year, to 285,588 head, with cow slaughter over the same period surging by 55 per cent.

Bull beef supplies are expected to tighten throughout the second quarter, although the usual seasonal culling of dairy cows is expected to see supplies of 90CL remain strong.

Demand from the United States continues to underpin strong export growth, with overall January shipments up 15 per cent, year-on-year, to just under 40,000 tonnes.

Farmgate and export prices are expected to firm in the second quarter, with demand for the United States expected to pick up as the country heads towards its grilling season and as Australian supplies eventually tighten, the bank said.

In its commentary on the international market, Rabobank said large parts of Australia remained in drought, keeping slaughter and export volumes high.

The US dollar continued to favour the major beef trading nations, assisting those countries exporting to the US such as Canada, Mexico, Australia and New Zealand.

The Russian ruble, on the other hand,improved against the US dollar through February and March.

Russia is one of the world's largest beef producers, and an improved exchange rate should support an increase in Russian imports, Rabobank said.

Ireland was granted access to export beef to the US in January, the first EU country to be granted permission after the ban imposed 1990s following an outbreak of BSE in Britain. Rabobank said Chinese retail beef prices have been stable but that demand was weakening.