Saturday, March 30, 2024

Farmers respond to deals

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Deer farmers are locking in venison returns as at least one major processor signals a correction looming on the peak pricing.
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Venison marketers have reported good uptake from farmers for the supply contracts on offer to mid-November in the North Island and to February in the South Island.

While prices and conditions vary between companies and islands it’s normal they generally peak in October before easing off as autumn approaches.

The contracts are designed to encourage farmers to supply deer in the preferred weight ranges at times markets want them.

At a recent meeting of the industry’s market working group, Deer Industry New Zealand chief executive Dan Coup said marketers stressed the continued importance of the traditional chilled season, from August to November, when European demand peaks. 

He’s encouraged by reports farmers are responding well to the contracts on offer. 

“It makes sense for them to lock-in what are very good prices.

“It’s also good for our marketers, who can match supply with customer demand,” Coup said.

Alliance livestock and shareholder services general manager Heather Stacy said farmers welcome contracts because it guarantees them a minimum price and processing space.

“They’re a one-way bet for them really.

“The downside risk to pricing is mitigated and they have the option to take the schedule on the day if it is higher.”

The Alliance schedule is at $11.30/kg with a minimum price contract at $11.75/kg for chilled venison for the October period. 

But the prices are expected to soften from late November to February. 

That is a consequence of the change in mix to a higher percentage of frozen product and some buyer resistance creeping in at the high levels, Stacy said. 

The company’s contract for supply goes to the end of February and the upper weight range goes to 100kg.

“Contracts are structured so that we get the supply of deer we want, in the weight ranges we want, at the time we want so we can meet the expectations of our customers.”

The rapid rise in venison prices in the past two seasons has clouded the market fundamentals.

Prices have been progressively pushing higher and key markets are starting to feel some price resistance on the higher-value cuts. 

Negotiations for the major game season period have been more protracted than normal. 

Those prices might have peaked and some correction is likely over the coming months, Alliance said.

Silver Fern Farms deer procurement manager Malcolm Gourlie said the European game season has always been important to the deer industry and it always will be.

“It is important that we look after it,” he said.

When SFF released its first Global Retail Contract to February it was to give deer farmers confidence to grow their deer out.

“In the past, processors used to be supplied with a lot of young hinds and poorly-grown stags in spring for slaughter at around 40-45kg carcase to capture the chilled schedule.

“These were well below the weights preferred by the market,” Gourlie said.

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