Friday, March 29, 2024

Lamb volumes finally moving

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Southern South Island lamb flows into processing plants are higher now than they were a year ago but the season overall remains slower.
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Alliance’s Lorneville plant in Invercargill, the country’s biggest, is at capacity with all chains running, the co-operative’s livestock and shareholder services general manager Heather Stacy said.

“By this time last year we’d had a peak and it was tailing off. This year’s been slower but now the lambs are flowing in.”

The South Island lamb kill has been running consistently about 15% behind last season but she thinks the gap is finally narrowing.

In most of Alliance’s major Southland and Otago catchment feed levels are still favourable and lambs are fattening well. An exception is Central Otago where plentiful feed earlier has deteriorated in the dry conditions and stock are struggling to add weight.

Canterbury supply is slower, as usual at this time of year, with a lot of lambs being finished on irrigated arable land after being bought as stores.

With the overall supply being lower than over the last couple of years, volumes are still out there with no pressure on feed in most places, Stacy said.

However, she cautioned the supply situation is finely balanced and farmers won’t want to be caught with stock needing to be processed in the short operating weeks either side of Easter, which could lead to space problems, and they also need to ensure lambs don’t get too heavy. 

“It’s good now, we’re averaging about 18.5kg to 19kg but we wouldn’t want lambs around that 25kg weight range if farmers do hold them too long.”

The South Island schedule, post the valuable Easter chilled supply contracts, has moved to the $6.60kg/$6.80kg range and Stacy doesn’t expect much movement from there over the next few weeks. The rates are about 5c to 10c/kg above this time last year.  

Market demand for lamb remains strong. 

Alliance has redirected some products away from the United Kingdom as a safeguard to issues around Brexit, she said.

GlobalHQ analyst Nicola Dennis said the easing in lamb schedules since the Easter chilled premiums ended suggests processors are getting reasonable supply levels into their plants, even though official figures show South Island supply was still 15% behind last year’s levels by February 9.

“The slaughter stats are still showing it’s worse each week but that doesn’t mean it hasn’t picked up since then. 

“I think it will have over the last three weeks.”

It is also possible there is a bigger reduction in lamb numbers than surveyed by Beef + Lamb NZ and there might have been significant numbers of lambs moved to the North Island, either by the companies for processing or by traders as store lambs.

North Island processing stats show the February 9 lambs tally was 3% behind last year, which wasn’t flash, and 6% behind the five-year average. The North Island schedule was expected to fall to about $6.90/kg on Friday from $7 a week earlier.

A factor to watch out for is the increase in lambs from Australia being sold for export, Dennis said. 

The crop is usually 60% sold to the domestic market but prices might be causing some consumer resistance and export volumes are now higher.

Beef inflows to NZ processing plants are strong, Dennis said.

The February 9 tallies for cull cows show North Island numbers were 27% lower and the South Island off 11% from last year’s big tallies at the same time. 

Plentiful feed has encouraged farmers to keep milking for longer but the dry weather has finally brought them in and the supply is now starting to put strain on killing space, especially in the North Island, Dennis said.

In the South steer numbers are 6% higher than last year and the five-year average, heifers are down 12% on last year but up 8% on the five-year average and bulls up 3.5% on last year and 35% on the five-year average.

In the North steers are up 7% on last year and down 9% on the five-year average, heifers are up 8% year-on-year and 4% on the five-year average and bulls down 2% on last year but up 35% on the five-year average.

Pet food stake

Alliance has paid $15 million for a 50% stake in pet food firm Meteor.

It is a joint venture with Scales Corporation.

The deal is for the New Zealand market and will take most of Alliance’s food co-products but Alliance will also benefit from Scales’ 60% ownership of United States pet food maker and marketer Shelby.

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