Farmers paying more than $3/kg liveweight in the store cattle market needed a schedule price in the high $5s to $6 level but that might not happen, Silver Fern Farms chief executive Dean Hamilton said.
“We’re a bit concerned that prices are pretty frothy in the sale yards.
“We see the schedules weakening a bit.
“They’re past the point where they should be.”
Silver Fern expected more bull calves in the processing chain in the new season, after the much higher level of bobby calf retentions last year.
That would coincide with expected higher supply out of the United States and Australia as well.
Beef demand from China was increasing but not at the level of the short-term supply increases expected.
More lambs were expected for processing in the new season as well but market demand was strong and overall world supply was low.
The outlook was good even though sheep farmers were being told to expect the normal $1/kg fall in the lamb schedule once the European chilled supply season ended.
“That fall is really about the product mix, back to more frozen, than the markets,” Hamilton said.
Reports of an excellent lambing season around the country indicated a possible 5% to 10% lift in lamb processing numbers.
The numbers should be over the 20 million mark and possibly up towards 20.5m, he said.
That was up from the 19.3m to 19.4m tally expected when this processing season ended on September 30.
There had been no reports of a repeat of the facial eczema issues that hurt the industry in the North Island last year.
Exporters would begin their Christmas chilled supply programmes during October and the current low level of lambs available to supply strong market demand in the United States and China had pushed the schedule well up to the $7/kg level in the South Island and about $7.10 in the North Island for the heavier lambs remaining from last year.
Hamilton said the European chilled market would hold farmgate prices at firm levels but after that the return to a greater mix of frozen product would affect prices.
“We would normally see a $1/kg rule of thumb difference in value from the Christmas chilled period to the main part of the season, everything else being equal.
“That is based on foreign exchange rates staying round current levels.”
A main season price around the $6 level would be a good outcome, especially on the greater volumes expected, he said.
That would be about 60c/kg up on last year’s prices.
