“It’s a grass market and it’s paying over the odds.”
While pasture growth continues at “phenomenal” levels, the store lamb price is expected to remain close to current levels but he was not as sure about the outlook for the schedule offered by meat companies.
Williams buys between 3000 and 6000 store lambs a year ‑ from autumn through till spring ‑ as part of arable-dryland farming operations near Masterton. He thinks margins might be hard work in the months ahead.
Central Hawke’s Bay farmer Richard Ellis is another big store lamb buyer throughout the year ‑ his farm irrigation puts him in a strong position through the region’s summer drought period.
He was able to buy in at reasonable prices at the start of summer but because the market has become more aggressive his average annual profit per lamb will be reduced.
Williams also said the market has become very competitive over the past month or so because of the excellent Hawke’s Bay autumn. There are enough lambs to meet demand now but he’s expecting the supply to tighten up later in winter, in the July-August period.
“Finally, the breeding farmer is getting paid for his efforts.”
He said there was talk of a schedule in the $6.50/kg range at some point in the months ahead.
Even though store lamb prices have spiked to high levels above $3.10/kg for lighter males in recent weeks, Williams was looking at a margin of $15-$25 a head once the lambs were finished.
“You need to work towards this to pay for the cartage, drench, fertiliser and debt.”
Even farmers who don’t usually trade in store lambs are thinking of doing so if feed conditions keep improving.
Vince Galbraith, who farms in the Tikokino area of central Hawke’s Bay, said he was looking at the possibility in the next three to four weeks, but like other farmers was also considering grazing dairy cows as a viable option as they were dried off.
Galbraith got his own lambs away earlier in the season, as usual, with weights lower than usual because of the drought. Once that broke, the whole farming environment changed within 10 days.
“It’s been unbelievable,” he said.
His ewes have gone into mating in excellent order, and he thinks there should be really high lambing percentages achieved in spring across many parts of the country.
Although the schedule has gone higher than anyone expected, Hawke’s Bay Federated Farmers meat and fibre chairman Adrian Arnold said the store lamb market was a numbers game, because farmers who sold at $2.10kg-$2.15/kg during the drought had found themselves short of stock to manage pasture levels.
“People are buying on a per-head basis rather than per kilogram. They’ve realised they need numbers on the ground to get back in.”
Price levels meant margins would be slimmer and the returns would come from turnover levels.
Because of the low prices secured earlier, farmers were now hanging on to the lambs they had retained to build up weights and processing margins. There was also time for farmers who had to spend up to get their stock replacements to get them up to maximum weights.
“I can’t remember an autumn as good as this one. Conditions went from worst to best within a couple of weeks because of the nitrogen boost from the rain,” Arnold said.
Arnold isn’t a store buyer, but sold 1000 lambs at the going rate in February as farmers “hit the wall” in February.
Farmers had strong memories of previous years and took a proactive stance to look after their capital stock.
“We worked on doing that with our ewe and hoggets and also lifting the lambs we still had on board.”
The ewes had lost little weight and blossomed on the feed that came with the rains, and hoggets had improved from ordinary to looking really good.
