28 Farmer invents water tester Vol 16 No 33, August 21, 2017
farmersweekly.co.nz
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Beef prices fall Alan Williams alan.williams@nzx.com
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ATTLE farmers are being warned a “wall of United States beef’’ coming onto the market over the next several months could knock a hole in their returns. The domestic US supply would have a negative impact on the price of imported beef in to the country, AgriHQ analyst Mel Croad said. Prices might have peaked in June and since then the impact had been shielded by tight imported beef supply but that was changing. A dry winter in beef producing parts of Australia had forced production higher there and exporters were already accepting lower US pricing, she said. That would affect New Zealand exports. Prices might remain above historical levels but there would probably be financial pain for farmers who had been paying above the odds for store cattle earlier this year, often in the race for scarce stock supply to manage strong pasture growth. As recently as July beef finishers were paying record prices for rising two-year-old steers. Affco Holdings general manager Andy Leonard said US prices for imported beef had already fallen about US5c/lb in the last week or so. “The US production is getting much higher and that fresh
product going into the grinding market is easier for them than imported beef.” NZ supply remained tight and Affco didn’t expect the main bull beef season to start much before the usual time in late November, Leonard said. With conditions very wet round parts of NZ, especially in the North Island, if spring and summer were warm, farmers might take advantage of feed supply to put more weight on their livestock, which might slow the supply peak. Leonard saw some positives for the NZ outlook; firstly, that Brazilian beef was still banned from the US market and secondly that Australian supply could reduce again if weather conditions become more favourable as the sector there was still in a herdrebuilding phase after huge supply levels in recent years. “We think their production will still be down on their five-year average. We think that will help us a bit and the consumption and economic outlook in the US is positive. “Whatever happens in the grinding market, that is the market, and we do all we can and we do our best to maximise the price.” Leonard did not think the new, higher Japanese tariffs on NZ frozen beef would push that product into the US and put further pressure on pricing. “It depends on the sale mix but I think they’re different products. It’s mainly prime beef going into Japan and that can go to other markets.”
PREPARED: Manawatu farmer Hamish Brown will get slimmer margins but is ready for a correction in beef prices.
Croad said the US 95CL beef price had peaked in June at US$2.40/lb and was trending steadily lower to $2.20/lb in August. The AgriHQ forecast was for a $2.12 price in September, $2.04 in October, $2.01 in November and $1.96 in December before a
slight lift back to $2 in January. Using the North island schedule price a 295kg to 325kg bull was at NZ$5.65/kg in June, dropping to $5.45 in August. The AgriHQ forecast was $5.35/kg in September, $5.30 in October, $5.25 in November, $5.15 in December and $5.05 in January.
“It took months to get to US$2.40/lb and that’s quite high but it’s just taken weeks to come down,” Croad said. Till a few weeks ago the expectation was that it would go higher.
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