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MARKET REPORT

By Guy Trafford

For the average New Zealander, the impact of the novel coronavirus is something that is happening overseas, mostly in China, and so long as it stays there, we assume we will be relatively immune from its impacts. On one level this is correct, hopefully our border controls are sound and if it does somehow manage to breach them, then our health systems are more than able to cope. After all, while a nuisance the virus to date has proved no more fatal than the average annual influenza.

However, for those involved with food ex ports and tourism then the impacts are starting to bite. For the food exporters the virus impacts come at a time when the Chinese market (in particular) is already under some pressure.

Prior to the outbreak, China was already finding the prices having to be paid for red meat was getting too high. Driven up by the lack of pork availability, prices hit a point where some Chinese customers took a break from imports to let the market cool.

Taylor Preston expected this cooling down period to finish after Chinese New Year was over (January 24-30) when buying would re sume again, presumably at a slightly more subdued lev el. This explains some of the price declines seen in recent weeks. In the meantime the coronavirus has struck and severely confused the situation. Chinese New Year has been extended an additional 8 days to February 8, but perhaps more critically, due to restrictions on travel within China, containers of pr oducts cannot get off the wharves. Mutton has taken the biggest hit falling 50 cents/kg last week and taking another hit in this week’s schedule.

Taylor Preston expect the China market to reopen and recover, the question is when.

The meat industry is not the only one im pacted. The crayfish industry sends almost all its expor ted product into China and that trade has also come to a screeching halt. Ditto the log trade. Dairy products are not immune from the influence; again, China is our single largest market (as it is for red meat). Fortunately, dairy products are not as vulnerable as they can be stored when processed into powder and added value.

While the recent ANZ Weekly Focus takes a reasonably circumspect view of the impacts, in my view the repercussions may continue longer and hit deeper for some sectors than we will be remotely comfortable with. What we can see is that the situation is fast moving in the wrong direction.

The SARs virus took about 7-8 months the run its course so if the influence of coronavi rus takes as long there will need to be some r apid realigning of markets we send product to and no doubt these will be at discounted prices.

Markets Without a doubt everything is heading in the wrong direction and it is anyone’s guess as to how long the current trend continues and to what levels they will fall. This week’s summary makes fairly grim reading. The only consolation is that some prices are still ahead of the same time as last year. Sheep meat Anything that relies upon China for sup port has taken the biggest hits ie mutton but all gr ades have tumbled considerably. The situation is compounded by the dry weather and lack of space in works.

The uncertainty is being felt in the saleyards as well. Ewes are particularly affected r eflecting the falls in the processor’s schedules.

W ool Only the coarser crossbred wools and lambs to report on from the Napier sale and they have continued the downward trends from the previous weeks. Beef Beef hasn’t been spared the pain either and falls have been considerable. Again, saleyards reflect schedules.

Venison While not much venison may go into Chi na it appears to be caught up in the price cutting as will with more trimming on its values. D airy Last week’s GDT results brought an overall drop of 4.7 per cent, a direct influence of the Chinese virus. The results were mitigated by rises for butter and cheese. The powders were down 2 per cent for SMP and 6.2 per cent for WMP.

Volumes were also down 13 per cent. What may mitigate further falls for dairy products is the influence of the dry in the North Island and the lower production levels. Fonterra’s share price has started another downward ride falling to $3.86 from the $4.01, likely an other casualty from the China influence.

H Farm gate price watch …

for the latest prices, visit www.interest.co.nz/rural February 11, 2020 current price range high low Saleyard prices … u LAMB ($/head) weighted average Store 110.00 170 20 Prime 120 -168 286 90 u HEIFER (c/kg) 250-350 kgs Lwt Store 229.00 430 134 u STEER (c/kg) 481-580 Lwt Prime 235 - 240 323 220 52 week

This 4 wks 3 mths 1 year week ago ago ago high low Processor prices … u LAMB ($) including 1kg woolly pelt 15.5 kg YM SI 105 117 133 102 133 100 17.5 kg YX SI 119 132 150 116 150 113 19.0 kg YX SI 129 143 163 126 163 122 21.0 kg YX SI 142 158 180 139 181 135 Local trade (c/kg) SI 750 820 860 730 880 700 (16-22kg) u MUTTON ($) including 0.5kg pelt 21.0 kg MX1 SI 97 114 132 104 136 99 u BEEF (c/kg) P2 steer SI 465 521 565 486 600 471 (270-295kg) P Cow SI 356 410 453 366 482 333 (170-195kg) M2 Bull SI 445 501 547 455 579 440 (296-320kg) Local trade P2 SI 540 580 600 530 600 500 (180-280kg) u VENISON ($/hd) gross AP Hind 50kg SI 399 414 453 476 505 399 AP Stag 60kg SI 485 503 549 578 612 485 AP Stag 80kg SI 646 670 732 770 816 646 52 week

Auction prices … u SI WOOL indicator prices (c/kg, clean) Source: WSI, NZMerino Mid mic (23.1-31.5) 998 1,019 987 866 1,193 866 Fine Xbrd (31.6-35.0) 342 377 425 432 550 326 Coarse Xbred >35 mic 267 289 313 289 364 267 Merino 2,070 2,114 2,056 2,387 2,428 1,588

Local market prices … u GRAINS ($/tonne, delivered Canterbury) free price Source: Midlands Grain Wheat, milling,12.5%p 416 420 421 420 440 300 Wheat, feed 414 420 418 418 435 280 Barley, feed 406 410 412 415 430 290

International market prices … u LOGS indicator prices, $/tonne Source: PF Olsen Forest index Dec-19 122.00 121.00 118.00 128.00 138.00 118.00

u DAIRY (NZ$/tonne) Butter 6,619 6,064 6,528 6,615 8,696 5,755 Skimmilk powder 4,803 4,727 4,714 3,843 4,803 3,599 Wholemilk powder 5,057 4,745 5,197 4,490 5,242 4,398 Cheese - cheddar 6,385 6,045 5,789 5,248 6,523 5,248

Fonterra milk price 2018/19 final $6.35 2019/20 f'cast $7.00 - $7.60* Fonterra dividend 2018/19 final $0.00 2019/20 $0.15 - $0.25 Fonterra share price * before retentions NZX FCG $3.86