MARKET UPDATE

10 APRIL 2015
MARKET UPDATE
AGRIHQ VIEWPOINT
Silver Fern Farms Message:
CONFIDENCE HIGH IN THE BEEF SECTOR
Confidence is high in the beef sector, with shortages of stock both in NZ and
abroad continuing to support prices. Beef cow numbers are low in the US and
continual high kills in Australia are seeing diminishing capital stock numbers
there too.
Inventories of cattle remaining to be processed this season in NZ are low. The
fast start to processing this year, due to both high prices and dry conditions,
has created a shortage that is rearing its head now.
This has led to firmer prices in the US imported beef market which, while not
at the record levels of last spring, are very good in historical terms.
Farmers are receiving good prices for prime stock as a result, and this is
flowing through to replacement store cattle. Short term confidence can be
seen in the values of older store cattle at the moment, while longer term
confidence has shown through at recent weaner calf sales. Prices for weaners
at some locations in the North Island have been more than $150/head above
last year’s rates on comparable lines. Heavy lots have made $3/kgLW while
medium and lighter lots have even exceeded that mark. Many calves in the
South Island have been affected by the dry conditions but prices have still
been above last year, despite the lower weights.
In this week’s report AgriHQ ask the
question whether lamb markets have
hit the bottom. They show a very cloudy
market outlook with significant uncertainty
around the timeframe for achieving a
bottoming of in-market price. We are
also uncertain when this period will end.
On the upside, reports from UK and
Europe are that Easter trade was very
good with buyers in a reasonably positive
mood post Easter. Our presence in China
received a boost yesterday with the
official opening of the Shanghai offices
of Primary Collaboration New Zealand
(Shanghai). Last year our sales to China
were in excess of $380 million. A key focus
for us from this initiative is on building
relationships which expand our branded
retail product sales and grow sales of our
Premier Selection range with food service
customers. China Market Manager Claire
Tan is based in the Shanghai office and
will represent us. Her role supports our
marketing programmes with Silver Fern
Farms’ key Chinese customers including;
NZFocus, Stand Top and Tenderplus. You
can read more about it on silverfernfarms.
com
NEWS HEADLINES
Cold shoulder for meat to go
Meat companies hope an agreement for chilled New Zealand product to go
into the Chinese market is just months away.
MIE report shows need for common ground first
Not everyone has agreed with all Meat Industry Excellence’s suggestions but
it was to be admired for its unwavering determination to see change in the
industry, Federated Farmers meat and fibre chairman Rick Powdrell says.
For more visit www.fwplus.co.nz
WEATHER WATCH
NZ DOLLAR
NZ dollar
0.95
NZD value
0.85
0.75
0.65
0.55
0.45
Mar-14
Euro
Jul-14
Nov-14
GBP
Mar-15
USD
This report was independently produced by
AgriHQ for Silver Fern Farms and its shareholders.
For more information about AgriHQ products go to
www.agrihq.co.nz
www.silverfernfarms.com
RAIN FINALLY ARRIVES FOR SOME
While there hasn’t been much
significant rainfall in the last week in the
South Island, good solid rain has arrived
in the lower North Island. The Manawatu
received 45mm on Wednesday, 50mm on
Thursday and further 50mm was forecast
for Friday. River levels have quickly risen in
the region, bringing an end to the dry spell
there. However farmers in other regions,
particularly those in Canterbury are still
waiting for some decent follow-up rain to
the little that they have received in the last
few weeks.
LAMB
UK CKT lamb leg 1100 700 Oct Dec Feb Apr Jun Aug NZ lamb exports 45 30 15 0 Oct Dec Feb Apr Jun Aug NZ lamb schedule (17.5kg CWT) 120 100 80 Oct Dec 5-­‐yr ave Feb Apr Last yr Jun Aug This yr NZc/kg 60 BEEF
SHORT WEEKS SLOW BEEF TRADE
The weeks around Easter have been relatively quiet ones for NZ beef
markets. Little interest has been shown from US buyers, knowing that short
weeks are often an unfavourable time to buy, with some even attempting
to bid the market down. This has, however, been matched by limited
offerings out of NZ due to reduced processing throughput. Amidst this,
exporters have still able to achieve higher prices overall, with 95CL bull and
90CL cow exceeding US$2.60/lb and US$2.40/lb respectively. Aided by a
much weaker NZ dollar versus a year ago, returns for these products are
currently 31-35% higher than a year ago in NZ dollar terms.
Elsewhere, demand from China is reported to be sound, with exporters
able to consolidate on last year’s sharp demand growth. A record high
monthly volume of 5,440t was shipped to China in February, representing
13% of NZ’s total beef exports for the month. Anecdotal reports suggest
shipments in March were even higher, providing exporters with a valuable
alternative to markets such as South Korea, where demand remains
relatively weak.
1000 900 800 700 600 500 400 Oct Thousand tonnes $/hd (net) Thousand tonnes 500 HAVE LAMB MARKETS HITS THE BOTTOM?
Post Easter, lamb markets remain in a lull with not a lot of activity. Many
consumers in the UK take the opportunity to stock up on lamb at Easter with
very attractive specials on offer and put product in freezers, leaving retailers
there in no hurry to replenish supplies. Most NZ exporters are now negotiating
deals for May-June delivery and, while wholesale prices are still under pressure
across the board, returns may be approaching the bottom.
China has been the most problematic market, particularly on newer, less
traditional items such as lamb forequarters and mutton carcases or 6-way cuts,
which it has taken more of in the past three years. Importers in China are still
taking traditional low value cuts such as lamb flaps, but there is no urgency
from buyers, who do not need extra product. Those importers that are buying
are mostly only taking up opportunistic deals at low price points.
However as winter approaches the NZ kill will taper off, with about 70%
of this season’s lambs already likely to have been processed. This leaves
importers about 10 weeks to lock in any bigger deals before supplies drops
away, at which point exporters will be more confident in pushing prices higher.
c/kg (net) NZc/kg 900 50 40 30 20 10 0 600 550 500 450 400 350 300 US imported 95CL bull Dec Feb Apr Jun Aug NZ beef exports Oct Dec Feb Apr Jun Aug NZ steer schedule Oct Dec 5-­‐yr ave Feb Apr Last yr Jun Aug This yr VENISON
NZ venison schedule (60kg stag) $/hd (net) 500 450 400 350 300 Oct Dec 5-­‐yr ave Feb Apr Last yr Jun Aug This yr VENISON MARKETS STEADY
It is a quiet period for venison markets as production slows towards
winter. At this time of year there are stable contracts in place and prices
have held steady across the range of different cuts.
Prices paid in euros by customers, and the volume demanded, has
remained steady, which has resulted in a net decrease in NZ dollar returns
when the low value of the euro is factored in. Although most companies are
attempting to open up markets outside of the EU, most of these markets
are small and cannot make much impact on the volume going to Europe.
Disclaimer: This report is published by NZX Rural Limited (NZX Agri) for the information of Silver Fern Farms Limited and its shareholders. The views expressed by NZX Agri do
not necessarily represent the views of Silver Fern Farms Limited. No part of this publication may be reproduced in any form or by any means or used to make any derivative work
without written permission from NZX Agri. This report is published with due care and attention, but neither NZX Agri and its group companies nor Silver Fern Farms Limited accept
any liability in relation to the completeness, accuracy or timeliness of this report and its contents.
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