Worsening weather conditions across New Zealand have sparked a heavy turnoff of slaughter cattle, reflected in recent lower prices for imported grinding beef in the country’s largest export market, the US.
Little rain was reported across New Zealand in February, with a drought declared across most of the country’s North Island. The South Island is also challenged by ongoing dry conditions.
Providing a summary in its Agribusiness Monthly newsletter, lender, Rabobank reported that dry weather was likely to persist across NZ well into March, although the three-month outlook is expected to see conditions return to closer to normal.
The weather impact has seen NZ cattle prices across all categories ease substantially. Prices for North Island dairy bulls, used to produce manufacturing beef in direct competition with Australian exports – are down 8 percent on a month ago, and the same from this time last year (see graph).
“The lack of feed and water particularly on the North Island has forced producers to offload stock in big numbers,” Rabobank’s newsletter reported.
As a result, total adult cattle slaughter since the start of the NZ processing season (October to January) has surged 23pc in comparison to last year, to 718,000 head.
The big NZ kill has been highlighted by market analysts as a contributing factor behind lower than expected 90 CL grinding meat prices for Australian exports into the US so far this year (see Beef Central’s home-page 90CL price graph).
NZ’s higher production has underpinned higher beef exports, with total beef shipments during January rising 24pc year-on-year, to 31,600t, senior animal protein analyst Sarah Sivyer reported.
Beef + Lamb New Zealand recently has released its mid-season update, with a revised outlook for livestock numbers, slaughter and production. This includes a downward revision to provisional stock numbers.
For beef cattle, the herd contracted 2.9pc by June last year to 3.74 million head and is forecast to increase 0.4pc by 30 June 2013. In contrast, dairy cattle numbers increased 4.7pc by June last year to 6.46 million head, but are expected to decline 0.9pc by mid-2013.
Beef + Lamb New Zealand forecasts cattle slaughter to reach 2.27 million head in 2012-13, 8.8pc higher than last season – mainly due to an increase in the dairy cow cull. Carcase weights are expected to be lower this season, with growing conditions well back on the previous season, while farm-gate prices are forecast lower.