AgriHQ’s Weaner Fair Outlook 2016 report released last week has revealed results of the first fairs this year indicate the market could easily surpass the record levels of 2015, and in some cases prices are up by more than $200 a head.
“Buyers will struggle to purchase good lines of quality beef weaners for less than $800 a head this season and prices have already pushed well above $1000/head at some North Island sales,” AgriHQ analyst Mel Croad said.
A number of factors were driving the trend, Croad said. Weather patterns over the past six months was one.
The early and on-going warnings of a significant El Nino event developing through the summer meant farmers took action earlier on, particularly those farming in regions where El Nino had stung before. “As stock was sold paddocks sat empty, because the fear of being caught with extra stock through a drought was too great.”
Unexpected improvement in conditions, with most regions receiving rain in January, meant farmers have come back to market.
Another contributing factor has been the diminishing beef breeding herd in New Zealand. “Nationally beef cow numbers fell last year with Beef+Lamb NZ forecasting the breeding cow herd to fall below 1 million head for the first time. In the last 10 years beef cow numbers have reduced by 30,000 head, directly impacting the numbers of steers and heifers coming through the system.” As a result “fewer weaner calves were born last spring with early estimates forecasting a drop of 50,000 head to 1.043 million head nationally,” the report said.
“We have seen herd numbers run down due to drought conditions in the United States and Australia, and these markets are now moving into a period of rebuilding numbers. For New Zealand it seems the beef cow herd is losing its following,” Croad said.
A further driver of the escalating weaner prices has been lower demand for dairy support, with the high probability that farmers who were previously providing support to the dairy industry might find this revenue stream wasn’t an option this year.
While the immediate pricing prospects were favourable, Croad also suggested the outlook for Farmer Operating Prices remained solid.
“There is strengthening demand from key markets that are noticing a slowdown in supply. Prices remain at historic highs and returns for cattle remain favourable. Prices for the rest of 2016 should lift to a spring peak but the ceiling might be lower as production levels start to lift in key overseas markets and beef continues to come up against cheaper competing meats.”
“This solid outlook and the trend of increasing weaner prices for the last two years should encourage beef cow breeders to start retaining more heifers for replacements in order to grow the national herd, as clearly there is the demand to justify more beef cattle,” Croad said.
To read the full report click here
