One of my South Island mates who has long been a great advocate of co-operatives was keen to point out that selling out half of one of them to the Chinese wasn’t going to help.
I, in turn, pointed out the two co-operatives to this point are fully farmer-owned and process and market a majority of the sheep meat and one could hardly say recent and current prices are a road to riches.
Another correspondent said my belief that dairy pricing was improving partly because of a diminishing world supply wasn’t exactly right, despite what mainstream and rural media have been reporting.
The graphs he provided showed European Union and United States production levels ahead of last year, which, in itself, was a record production level.
It only makes me feel even more aggrieved that the dairy price improvement is happening despite high levels of production compared to the dropping supply of sheep meat production around the world.
This week I want to consider that other mainstay of dryland hill-country, beef.
Beef returns for the last couple of years have been excellent.
For the last two years both bull and steer schedules have been well above the $5/kg mark, certainly the best run of pricing in my 30-year farming career.
For those with high beef ratios and good seasons this has been a real boon and accountants around the country will be pouring over year-end accounts seeing some very good results.
For many of us with the more common beef ratios around the 30-40% mark, the beef returns have well made up for the disappointing sheep meat prices.
However, those with little beef or, harder to bear, those who have had tough seasons such as in north Canterbury and this year along the east coast of the North Island have had no choice but to cut well back on trading stock and have been right out of beef or well down.
Here bulls are our flexible stock option so we have been light in numbers on this class and nearly 50% down, which is still better than many east of me.
Those with prime beef for now are insulated with the increasing spring demand from domestic consumers.
I’ve been wanting to get numbers back up but have continued to be constrained by low pasture covers and reluctant to enter what I have considered a super-heated store market all winter.
I thought it might have eased off as we head into spring, offering an opportunity but it has strengthened, if anything, despite some dark clouds hovering.
So, instead, I’ve opened up what I have earlier than usual to get weight on them quicker and make them bigger though fewer cattle will help increase feed demand in October, hopefully maintaining overall feed quality.
So, like many others, I’ve chosen to sit it out and read the sale reports as others battle it out for their purchases. It has been brilliant for the sellers.
The two-year-old bull market has been very hot because this is the age group where a lot were not reared and this has forced would-be buyers into the yearling bull market as well.
A couple of weeks ago some 500kg bulls fetched 3.20/kg or $1600 at Feilding but all have been above $3/kg and yearling bulls above $3.50 as folk fight to replace or restock as the potential spring feed surplus beckons.
But without trying to sound like the harbinger of bad news, those dark clouds I mention are out there on the horizon.
Again the strong kiwi dollar is a real issue, particularly against the US because most beef is traded in that currency.
US cattle inventories are continuing to build and slaughter weights increasing and the Aussies and Brazilians have plenty to come on stream so supply is set to increase.
I don’t think the meat companies have been having much fun with their own beef returns with the high procurement prices coupled with falling US beef prices and increasing NZ exchange rate and last week we saw a drop in the bull beef schedules as they show they’d prefer not to compete for a scarce supply to only lose money.
Those with prime beef for now are insulated with the increasing spring demand from domestic consumers.
So we have most likely seen the best of the beef schedules but, as they say, nothing lasts forever. The best we can hope for is a slow decline in schedules so we can grow cattle out of the fall in pricing.
