Key Points MONTHLY - s3-ap-southeast-2. · PDF fileMONTHLY SHEEP & BEEF ... been little to test the resilience of sheep or beef values, ... 2.28 5.60 5.00 7.05 0.708 OCTOBER 2017 NZD:USD

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MONTHLY SHEEP & BEEF

Key Points

Good month for US beef market, but caution persists

NZ market steady on small kill

Chilled Australian lamb competing in Europe

Strong late lamb kill steadies schedules

VIEWPOINT

Any changes in markets, local or overseas, were minimal through September and early October. Restricted supplies within NZ have meant there's been little to test the resilience of sheep or beef values, however, so it's still too early to make a call on how the early 2017-18 season will track.

Beef markets have proven more buoyant than originally anticipated. Positive consumer demand in the US mixed with limited product from NZ and Australia have pulled lean grinding beef values upwards. While this has wiped some negative sentiment from the market, it's still widely believed there will be a downwards trend once more the NZ kill gains pace. Prime markets are solid too, though this mainly based off firm demand from China. South American beef is still constraining growth in this market.

Little has changed at the farmgate level. Consistent competition from local trade operators created some variability in the export prime prices, while manufacturing beef values were supported by the firm US market. There is still the potential for store

markets to re-ignite, but regular rain and caution around future beef schedules are still taking the edge off the market. Early 100kg calves are now trading, making around $50 more than a year ago.

The international lamb and mutton trade is holding up relatively well, though on restricted supplies. The only thorn in exporter’s side is in relation to the chilled trade, where competition from Australian product in the French market has taken the edge off prices.

The last rush of old season lambs are keeping processing plants full, though on limited capacity. This kept slaughter prices stable over the last three weeks. New season lambing is close to its conclusion, but it'll be at least another month before the slaughter of these will gain any volume. The early new season slaughter may be a little slower to begin since more ewes appear to be raring multiple lambs versus a year ago.

The store market has died down in terms of numbers traded, but ewes with lambs-at-foot are selling at around 25% more than a year ago.

Rachel Agnew

Waiting game for sheep and beef

Reece Brick

Currency TW LM LY

US IMPORTED 95CL NZ SLAUGHTER STEER UK CKT LEG NZ SLAUGHTER LAMB NZD:USDUS$/LB $/KGCW £/KG $/KGCW

2.28 5.60 5.00 7.05 0.708

OCTOBER 2017

NZD:USD 0.708 0.725 0.720

NZD:GBP 0.538 0.547 0.568

NZD:EUR 0.601 0.607 0.643

AUD:USD 0.777 0.802 0.759

ph 0800 85 25 80 email [email protected] web agrihq.co.nz


MONTHLY SHEEP AND BEEF PAGE 2 - CATTLE


CATTLE - UNITED STATES

Good month but caution persistsAny concerns about the US beef

market falling away were proven unfounded through September and early October. The US imported beef market slowly rose as the weeks progressed, with both imported 90CL and imported 95CL lifting 10-11c/lb. With that said, there has been evidence of some downturn this week.

A shortage of supplies from both NZ and Australia have continued to underpin the market. Frozen exports from NZ & Australia to the US in September came to 20,084t, 29% lower than the five-year average but still 20% more than last year's extreme low point. Some buyers are backing out of the market this week in anticipation of increased volumes of NZ bull meat.

One key factor which will dictate future market movements will be the volume of cows in the US that come forward for slaughter. The main US cow kill runs from late-October though to early February. Increased herd retention numbers in the past two years will likely push the tally upwards, but the question remains how much further. The cow kill in the four weeks to September 23

was already tracking 9% above a year ago, with beef and dairy cows lifting by similar volumes.

Another influence will be the increased use of fresh domestic beef through grinders which would otherwise use frozen imported product.

A positive aspect is the on-going strength of consumer demand for beef. The appetite for beef has exceeded earlier expectations in recent weeks, allowing the extra US beef kill numbers to be absorbed with relative ease through September. Whether this will be enough to support the market once the NZ beef kill gains traction in November is still uncertain, but has taken some gloom away from earlier sentiment.

Domestic 50CL prices were pinned in the 41-47c/kg range in the past month, supporting lean beef values.

All signs are pointing to increased supplies of beef within the US market in the coming months. Slaughter data through September shows all classes of cattle are killing above the five-year average level.

Cows are the main culprit behind the inflated slaughter figures (as discussed above), but steers were also tracking 4% or 55,000 head above the five-year average. Although insignificant

in relation to the larger kill, bull numbers also tracked 5% above a year ago through September, potentially competing directly with lean product from NZ and Australia.

Cold store data appears to re-enforce this trend too. USDA data shows beef inventories rose 28 thousand tonnes from late June to late August, the largest increase for this period over the past five years by quite some distance. Overall beef inventory levels are still within the normal range noted at this stage in the year.

Some relief is coming in the form of increase volumes selling into export markets through Asia, especially Japan. In the three months ending August total US beef exports came to 239,978t, a lift of 14% on last year and up 28% on the year prior.

Consumer appetite for beef has exceeded earlier expectations . . .

More beef in circulation

US imported beef market firms through September

US cow kill up y-o-y in four weeks to September 23

Domestic 90CL market begins to fall back

highlights

+10-11c/lb +9% -11c/lb

OCTOBER 2017

US beef prices Source: AgriHQ/USDA

+/- LW LM LY 5yr-ave

Imp. 95CL US$/lb +11c 2.28 2.17 2.02 2.25

NZ$/kg +38c 7.01 6.63 6.19 6.55

Imp. 90CL US$/lb +10c 2.08 1.98 1.85 2.11

NZ$/kg +35c 6.40 6.05 5.67 6.13

Dom. 90CL US$/lb -11c 2.17 2.28 1.95 2.26

Dom. 50CL US$/lb -5c 0.42 0.47 0.33 0.63

US cold storage levels (thousand tonnes) Source: USDA

+/- Aug Jul LY 5yr-ave

Beef +20.1 216.0 195.9 216.2 195.6

Chicken -8.1 353.9 362.0 350.9 320.4

Pork +9.4 261.1 251.7 276.2 267.1

Mutton & Lamb +2.6 14.7 12.1 16.6 15.0

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US cow slaughter

5-yr ave 2017 2016 Source: USDA

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Australia & NZ frozen beef exports to the US

5-yr ave 2015-16 2016-17 Source: B+LNZ/DAWR

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5-yr ave 2015-16 2016-17 Source: AgriHQ

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US domestic 90CL

5-yr ave 2015-16 2016-17 Source: USDA

...beef inventories rose 27.6 thousand tonnes from late June to late August, the largest increase over this period since before 2011.




CATTLE - ASIA

Prime markets steadyAsian prime beef markets are mainly

in the same state as a month ago, but it's difficult to read much into this given the small volumes of product that are in trade from NZ.

Demand is expected to increase from China as they look to secure product for the Chinese New Year celebrations which should cause a small increase in prime beef values. Large volumes of South American beef are still constraining any massive growth in this market, however.

Little activity of note has been reported in any of the other various Asian markets.

The main issue NZ prime beef exporters have had to contend with is the strong NZ domestic market. Limited supplies within NZ have driven local markets upwards, to the point where increasing volumes of Australian beef is making its way into NZ.

Meat companies selling on the export market have battled to match local suppliers, often having to settle on taking losses in order to secure the cattle needed to fill export orders. The situation is likely to correct itself once the NZ kill gains more volume.

NZ frozen beef exports to Japan have fallen away as expected since the introduction of the temporary tariff.

Just 729t made its way from NZ to Japan in August and September compared to 1709t last year and the five-year average of 1840t. Chilled exports to Japan have matched last year's volumes as well as the five-year average.

Little frozen product will be traded into Japan from NZ until the temporary tariff is lifted in April next year.

US exporters haven't been so deterred. Data for August shows only a minor change in frozen beef exports to Japan, however the portion of chilled beef entering Japan did increase to 62%.

NZ exports to Japan drop, US still active

Brazil's exports to China and Hong Kong up y-o-y in Q3

NZ's frozen beef exports to Japan down on last year

US increases share of chilled beef sent to Japan

highlights

+91% -57% 62%

OCTOBER 2017

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China beef imports

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Japan beef imports


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South Korea beef imports


Traded data indicates Brazil is selling significant volumes of beef in China and nearby markets. Throughout Q3 Brazil exported 52,154t of beef into China, more than twice last year's figures. Exports into Hong Kong were even greater, growing 76% year-on-year to 70,725t.

Average export values would suggest these markets have absorbed all this

extra product with little difficulty, with each market tracking within a small distance of a year ago in all relavent currencies.

Argentina was also much more active. The latest data shows August's exports rose 32% year-on-year to China at 6298t. Uruguay went against the trend of their neighbouring countries. Exports to China eased 8% to 9634t.

Brazil pumping beef into China




CATTLE - AUSTRALIA

Dry worsens, but is retreatingEach of the key beef producing

states felt the wrath of continued dry conditions through September. Under particular pressure were NSW and south-eastern Queensland, where rainfall tallies were among the lowest ever recorded for a September.

Cattle kill data released by Meat and Livestock Australia suggests 523,856 cattle were killed through September slaughter, 15% more than last year. However, questions have been raised about this data's accuracy, particularly in Queensland, where multiple processing plants were shut for maintenance.

Export data would suggest a reduction in the slaughter. Beef exports for September were at 87,902t, down 11% or 10,800t on the month before.

What this doesn't account for is an increase in beef either held in storage or sold into the domestic market. Both are possible given processors are battling to sell on the export market at break-even levels.

Regardless, the slaughter has slowed since September, as significant rainfall has made its way through south-eastern Queensland. This was particularly evident in the Eastern Young Cattle Indicator (EYCI) which re-gained 28c/kg in the week ending October 6, having fallen at least 10c/kg in each of the three weeks prior. Other areas have remained dry. Fortnightly forecasts suggest more of the same will occur into late October, though NSW may get a bit more moisture.

Fall in exports in September relative to August

EYCI falls sharply before re-bounding in early October

Share of beef sent to Japan falls despite tariff advantage

highlights

-10,800t AU$5.33/kg

27%

OCTOBER 2017

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Australian eastern states cattle slaughter

5-yr ave 2017 2016 Source: MLA

Contrary to earlier beliefs there's not been any uptake in exports to Japan despite Australia holding a major tariff advantage when it comes to frozen beef.

Only 23,572t was sent to Japan through September, smaller than August in terms of both total volume exported and market share. The same trend applied when broken down to just frozen beef exports too.

Out of the main export markets, Japan and the US were down 20% on August's data, while exports to South Korea were steady and volumes to China rose 30%.

Total exports for September were up 17% year-on-year or 12,500t. This was underpinned by a 47% increase in exports to the US, though Japan and China were up 15% and 17% too. South Korea eased 5% year-on-year.

Australia not capitalising on Japan yet

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Australian beef exports

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Australian beef exports (Jul - Sep)

5-yr ave Last year This year Source: DAWR




CATTLE - NEW ZEALAND

Steady market on small killProcessors found themselves

reasonably well stocked through September, though this was all relative to the low capacity on-hand.

The main trend noted was a solid run of cows from the west coast of the North Island, driven off farm by continuous wet conditions. This run of cows is expected to come to an end in the next few weeks, especially if paddocks begin to dry out.

The situation is a bit mixed for prime cattle. Local trade operators have continued to pay a solid premium over export trade operators. As a whole prime cattle supplies are relatively short, however only export companies with orders to fill have bothered to compete directly with local trade for numbers. Other companies have taken a more passive position, creating a spread in slaughter prices.

Bulls are in particularly short-supply, though numbers are always minimal at this point in the year. Any that are about have found good competition, buoyed by the firming US imported beef market. It is thought there will be a delayed start to the main bull kill season. It generally gains pace from early November onwards, but on-farm conditions have slowed growth rates to date.

Processors have regularly voiced their displeasure at the strength of slaughter prices, making it very clear they will be pulling schedules down once cattle become easier to source. This mainly stems from their belief that overseas markets will be more negative by the end of the year.

The national cattle kill came to 84,630 head in the four weeks to September 16, a fall of 9% on last year and 2% below the five-year average.

Store markets have kept at a steady and otherwise ordinary level. The spring flush in grass growth has yet to eventuate, keeping a lid on the market. Continued talk of lower beef schedules this season has meant buyers have taken a much more cautious approach to budgeting than earlier in the year.

Good quality cattle have met stable-to-firm interest through the North Island, but other dairy-cross lines were harder to move. Those in the market are keen to beat the potential rush for store

cattle that normally comes with spring.Yearling dairy-cross cattle came out

in strong numbers in the South Island through September. Early buyers were keen on these for a start, but once their needs were met the market softened. A similar trend was found for Friesian bulls too. Other traditional beef cattle have held steady.

Yearling store cattle are currently selling around the same level as last year once schedules are taken into account.

No rush for store cattle, yet

Less bobby calves kill so far this season

Early 100kg calves more expensive than last year

Over-supply softens South Island 1-year store market

highlights

-205,000 head

+$50 -15c/kg

A combination of more stringent animal health regulations and a willingness to diversify income has likely meant more dairy bull calves have been kept alive for beef finishing.

As of September 16 the bobby calf kill was down 13% or 205,000 head on the same period last year. A smaller dairy herd will have partially accounted for the difference, however the national cow kill was actually back 15% year-on-year this season. Four-day calf prices weren't negatively impacted by

the greater availability. The next phase of the calf trade,

the 100kg calves, is just beginning. Contracts for October have calves making $50 or 10% more than last year. There is some doubt whether the spot-market will be so strong later in the year.

Early growth rates have been mediocre, which may add to supplies later in the year. Also, the yearling bull market is anticipated to ease as more of these become available, potentially diverting demand away from calves.

How will the market handle higher calf supply?

OCTOBER 2017

Operating prices (schedule plus premiums) Source: AgriHQ

$/kgCW +/- LW LM LY 5yr-ave

Bull North Isl. n/c 5.50 5.50 5.20 5.04

M Cow North Isl. -10c 4.30 4.40 4.10 4.01

Prime North Isl. +10c 5.70 5.60 5.50 5.23

Local Trade North Isl. n/c 5.90 5.90 5.70 5.27

Bull South Isl. +10c 5.10 5.00 4.90 4.69

M Cow South Isl. +5c 4.25 4.20 4.10 3.53

Prime South Isl. +15c 5.45 5.30 5.55 5.04

Local Trade South Isl. n/c 5.70 5.70 5.55 5.07

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Procurement competition indicator Source: AgriHQ

Schedule as % of US price +/- LW LM LY 5yr-ave

Bull North Isl. +4.2 88.9% 84.7% 70.6% 80.3%

M Cow North Isl. +0.8 75.8% 75.0% 61.2% 67.9%

South Isl. +3.4 75.0% 71.6% 61.2% 59.3%

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5-yr ave 2015-16 2016-17 Source: B+LNZ

Store cattle paddock prices Source: AgriHQ

$/kgLW +/- LW LM LY 5yr-ave

1-yr Bull North Isl. n/c 3.15 3.15 3.05 2.94

1-yr Steer North Isl. +10c 3.70 3.60 3.50 3.27

2-yr Steer North Isl. -5c 3.00 3.05 2.95 2.91

1-yr Bull South Isl. -15c 3.25 3.40 3.05 2.80

1-yr Steer South Isl. -15c 3.60 3.75 3.25 2.99

2-yr Steer South Isl. -5c 3.05 3.10 2.95 2.79

PAGE 6 - SHEEP

SHEEP - UK & CONTINENTAL EUROPE

UK lamb consumption down in past 52 weeks

Tariff on out-of-quota exports to the UK & EU

UK slaughter prices take a hit through September

highlights


-11.4% 50% -44p/kg

The frozen trade into Europe has stayed on the same track as last month. A lack of supply has generated a small lift in values for legs, while middles have largely sold to a steady market in continental Europe. Market participants have noted a slight decrease in overall interest however, which is being blamed on the consistently expensive prices paid in the last few months

A little shine came off sentiment in the chilled market. Interest from UK retailers is a little flatter than was initially thought in recent weeks, with a few less supermarkets running chilled programs this year.

In addition exporters have to contend with increased direct competition from Australia, mainly within the French market. Lower quota usage throughout the year has allowed Australia to come in and undercut NZ traders to a larger extent than other years. This has the potential to shift more product towards

the UK than otherwise would have been the case.

With that said, the UK is still feeling the pressure from the constant 'Buy British' campaigns as well as the

historically firm NZD:GBP. It's likely a smaller share of NZ lamb will be traded into the UK as a result this coming season.

It's also worth noting changing consumer behaviours towards lamb in the UK. The switch towards faster and more convenient meal options is taking its toll on lamb consumption levels, particularly roasting cuts.

The UK lamb and sheep slaughter has risen week-on-week in the past four weeks, following the usual trend at this point in the year. Data released by AHDB shows 1.07 million lambs and sheep were processed in the four weeks to September 30, a minor decrease on last year.

Slaughter prices have fallen much

sharper than usual on the basis of these increased volumes. The average deadweight price was £3.82/kg in the week ending October 7, down from £4.24/kg at the beginning of September.

Store lambs coming forward are lacking a little in terms of weight, which may indicate a slightly lagged kill for the remainder of the year.

An announcement that the EU and UK have come to a preliminary deal to split the current sheep quota have been met with concern in the NZ sheep industry.

Under the terms of the current agreement NZ is able to export 228,000t of sheep meat into the EU (including the UK) tariff free. However it is now known that the EU and UK are attempting to split this quota based on trade volumes in the past three years.

Exporters are viewing this as a

threat in terms of their ability to divert product to different destinations based on market conditions. For example if NZ wanted to move product into the UK from the EU it would run the risk of hitting its quota, after which it'll be forced to pay a 50% tariff.

This deal is not finalised yet. A number of governments, including the US, have voiced their displeasure at this approach to quota management, as it will impact on many other products beyond lamb.

Deadweight values tumble as production lifts

Flexibility under threat

Lower quota usage throughout the year has allowed Australia to come in and undercut NZ traders . . .

Australia competes in France

MONTHLY SHEEP AND BEEF OCTOBER 2017

In-market frozen lamb cuts indicators Source: AgriHQ

TM LM LY 5yr-ave

UK CKT leg GBP/kg up 5.00 4.80 4.20 3.87

EU ABO leg EUR/kg up 5.90 5.80 5.40 5.39

US French rack USD/kg n/c 9.35 9.35 6.95 7.65

EU French rack EUR/kg n/c 18.75 18.75 13.50 13.25

Forequarter USD/kg n/c 5.10 5.10 4.50 4.42

Flaps USD/kg up 5.90 5.80 4.50 4.75

UK lamb consumption - to September 10, 2017 Source: AHDB

Last... 4 wks 12 wks 52 wks

Volume (t) 4,510 12,849 68,547

vs. LY -8.2% -9.0% -11.4%

Ave. price (£/kg) 8.97 9.05 8.64

vs. LY +2.2% +2.8% +4.6%

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Great Britian deadweight lamb price

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PAGE 7 - SHEEP

SHEEP - CHINA, MIDDLE EAST & US

NZ lamb exports to China up on a year ago

US sheep meat inventories at a 10 month high

Aus. mutton exports to China more than twice LY

highlights


+31% 32.4 million pounds

3969t

It's mainly been positive outside of the European markets for lamb and mutton. Limited supply remains the key factor to strong prices, but underlying demand appears positive as a whole.

Chinese importers have re-entered the market after taking a break through the winter months. They've shown a strong appetite for lamb, noted by the small increase in flap prices, as they look to secure stock for the Chinese New Year period. Their Interest in mutton has also been quite positive too, generating competition with other traditional markets such as those in Europe.

It's thought that this demand will linger for at least another two months, until the deadline for Chinese New Year shipments passes.

The Middle East is still dull in comparison, but this hasn't caused any issues to date given the low volumes coming out of NZ. There's still enough of a time for demand to emerge before the NZ kill gains momentum, but of course this cannot be guaranteed.

More lamb and mutton have been traded into China through September than last year. NZ data shows 31% more lamb and 26% more mutton making its way to China. Australia exporters followed a similar trend, pushing 40% more lamb and more than twice as much mutton in China's direction.

Lamb exports to the Middle East were up 21% from Australia, but NZ acitivity was down marginally.

US importers kept buying NZ lamb through September at essentially the same level as August. There are question marks around how long this can be sustained as more Australian product is being shipped to this market. The latest export data released by DAWR shows 4609t of lamb was sent from Australia to the US in September, the largest volume for the month in at least five years.

If earlier months are any indication, then there shouldn't be any concern. Shipments through June, July and August were all well above the previous five-years, but the market maintained its strength regardless.

At the same time, cold storage levels are rising. The latest USDA data put the US lamb and mutton inventory at 32.4 million pounds as at the end of August, well above the 20-29 million pound range observed in the previous 10 months.

Australia and New Zealand do tend to operate at slightly different levels within the US market, for example heavier Australian racks don't always compete directly with the lighter NZ types. Therefore it may not be until NZ supplies lift before the depth of US demand will be tested.

US still firm, but Australian supplies increasing

China keen on lamb and mutton


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Lamb flaps


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5-yr ave 2016 2017 Source: DAWR/B+LNZ

PAGE 8 - SHEEP

SHEEP - AUSTRALIA

Eastern states lamb kill up y-o-y in month to Sept 23

National trade lamb indicator stabilises through Sept

Eastern states mutton kill up y-o-y in month to Sept 23

highlights


+12% AU$5.96-$5.99/kg

+17%

Dry conditions, especially in NSW, have pulled more lambs to slaughter through September. In the four weeks to September 23 the eastern states lamb kill was at 1.5 million head, a lift of 12% on a year ago but only just above the five-year average. Information since indicates the slaughter has lifted even further, however difficulties sourcing data for NSW mean this is not conclusive.

The impact on farmgate values has been negligible for the most part. The national trade lamb indicator (NTLI) did ease in early September, but remained pinned in the AU$5.96-$5.99/kg range in the four weeks since.

Forecasts for October indicate rain should alleviate the lamb kill in NSW and Victoria, though South Australia is set to miss out on any improvement in conditions.

Assuming the forecasts of a 6.3% reduction in the lamb slaughter eventuate for the eastern states, this would indicate 3.91 million lambs will be slaughtered from late September through to the New Year. This would be down on last year's kill of 5.25 million head through the same period.

Farmers also took the opportunity to offload older ewes and older wethers while it was dry too. The eastern states mutton kill was 17% above a year ago in the four weeks to September. This trend was even more exaggerated in the export data, which shows a 37% lift in mutton exports relative to a year ago - the largest volume for a September since 2014.

Farmgate mutton values were holding stable, but had fallen by more than AU$1.00/kgCW in both NSW and South Australia last week.

Strong kill likely to slow


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PAGE 9 - SHEEP

SHEEP - NEW ZEALAND

Lamb slaughter prices stable since mid-September

Ewes with lambs-at-foot sell on a firm market

Beef + Lamb NZ expect a lower lamb kill this season

highlights


$7.00-$7.20/kg

+$15-$20 all counted

-1.3%

Old season lambs have kept processors occupied over the last few weeks. Many farmers were holding out for $7.00/kg slaughter prices, and processors have noted a consistent run of lambs since this level was reached. Supplies have out-weighed capacity in the South Island, where wait times of a week have become common, though restricted capacity has exacerbated this situation.

In terms of prices, any changes have been minimal since mid-September, with the North Island market paying $7.00-$7.20/kg last week and the South Island around $6.80-$7.10/kg.

It's widely believed this stability will remain until around November, when the kill will transition away from old

season lambs. From there, the market will be dictated by new season lamb supplies.

Small numbers of new season lambs are already coming in for slaughter in the North Island. There is the potential for a hole to emerge in the November kill. Reports suggest more ewes are rearing multiple lambs, which tend to grow slower than singles. A lack of warm and dry days in certain parts of the country will also be taking a toll on growth rates.

The latest kill data released by the NZ Meat Board shows 567,580 lambs were killed in the four weeks to September 16. This is on par with a year ago but 12% below the five-year average. Similar trends were noted in both islands.

The store lamb market has essentially run its course for the season. Only a few late-born old season lambs are being traded. Demand in the North Island held relatively well considering lambs run the risk of cutting their teeth. Interest in the South Island is much lower, however.

A good portion of buyer’s attention has been focused on ewes with lambs-at-foot. This is the only avenue to source new season lambs, and buyers have jumped at the opportunity to acquire these in recent weeks. Good lines with

early-born lambs have regularly made $100 all counted or more in both islands, while even medium types have managed $85 all counted. This is approximately $15-$20 more than a year ago.

The strength of mutton schedules have been key to the markets strength, removing some of the risk that would otherwise come with this trading. Confidence towards early season lamb schedules have been important too.

New season store lambs won't begin trading until mid-to-late October.

There are differing views on the direction the national lamb tally will take this coming season. Beef + Lamb NZ's New Season Outlook has forecast a 1.3% reduction in the lamb crop, citing a smaller ewe herd and similar scanning percentages to last year. They believe the ewe flock has shrunk by 1.9% since June 2016, mainly in Southland and the North Island with the exception of the East Coast.

In contrast at least one major processor is anticipating a 5-10% increase in lamb throughput. This is mainly based on better scanning results through the North Island.

One factor that's stood out to date is the positive rate of survivability throughout all areas of the country. Conditions throughout the country have been ideal for lambing, with cold days and other adverse weather events few and far between. Many high country stations are yet to lamb, so it'll be a few more weeks before farmers can be truly comfortable with how the seasons begun.

Beef + Lamb NZ has forecast an 8% fall in the mutton slaughter on the basis of a smaller ewe flock and an increase in ewe retention rates.

Good signs for new season store lambs

Mixed thoughts on new season lamb numbers

Late run stabilises market


0

200

400

600

800

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Thou

sand

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d

New Zealand lamb slaughter


1.5

2.0

2.5

3.0

3.5

4.0


$/kg

LW

North Island store male lamb


4.5

5.5

6.5

7.5


$/kg

CW

New Zealand lamb slaughter price


Operating prices (schedule plus premiums) Source: AgriHQ

$/kgCW +/- LW LM LY 5yr-ave

Lamb North Isl. +15c 7.15 7.00 6.00 6.08

Lamb South Isl. +10c 7.00 6.90 5.70 5.88

Mutton North Isl. +5c 4.25 4.20 2.85 3.26

Mutton South Isl. -10c 4.25 4.15 2.75 3.06

Store paddock prices Source: AgriHQ

$/kgLW +/- LW LM LY 5yr-ave

Lamb 35kg North Island -15c 3.55 3.70 2.85 2.86

Lamb 35kg South Island -50c 3.00 3.50 2.75 2.64

0

10

20

30

40

50


Thou

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NZ lamb export volumes


PAGE 10 - SHEEP

SHEEP - WOOL

Coarse-crossbred indicator eases through Sept

Second-shear wool values take at step back

Auction clearance rates lower

highlights


-7c/kg -10-20c/kg 71-80%

Long-term optimism continues to elude the wool industry, with a recent price rally put down to short term targeted buying from China.

NZ wool prices saw a steady, if slight, lift through late August and early September. While the price increase still left farmer returns far from sufficient, the change in market direction did provide a glimmer of hope that the tide had turned for the long term outlook.

Uncertainty about the long term is again present as it has come to light that the recent spike in demand has been driven by targeted buying from China. They have been trialing a new fabric, of which NZ coarse wool makes up a small component. The demand for this trial is now over, and Chinese buying activity has again become subdued. There is some hope that the trial proves

successful, and the new fabric is up-taken into the Chinese manufacturing process, but at this stage this remains very uncertain.

Supply of finer wool types from the South Island will increase in coming weeks. This market is faring significantly better in comparison to the coarse wool market, with fashion trends continuing to support these wool types. However, the supply of coarse wool will begin to increase from late November/December, and without the presence of China, the market is expected to remain subdued.

The current buying spree from China failed to put much of a dent in NZ wool stocks, which is likely to be a further limiting factor for the market as wool supply lifts.

Coarse wool prices have lost ground following last month’s brief price recovery. The coarse crossbred indicator has lost 7c/kg over the past four weeks to sit at $2.98/kg.

It is uncertain if the market will see further downside, but some reports indicate that the current wool stocks may weigh on the market in the short

to medium term. While the weakening of the NZD:USD

failed to provide any support for the market at the most recent North Island wool auction, there is some hope that further weakening, as expected by economists, may buffer prices to some extent.

Coarse wool prices lose ground through late September

Optimism eludes the industry


Clean on Floor (COF) wool prices Source: NZ Wool Services

$/kg +/- Last sale Last mnth Last year 2-yrs ago

2nd Shear (37 micron) -10c 275 285 420 580

Ewe (39 micron) -35c 275 310 485 625

Coarse crossbred indicator -7c 298 305 456 619

Wool sale volumes Source: NZ Wool Services

$/kg +/- TM LM LY 5-yr ave

Bales sold +1.9k 32.8k 30.9k 25.0k 33.2k

Bales passed in +7.0k 11.0k 4.0k 9.7k 6.2k

2.0

3.0

4.0

5.0

6.0


$/kg

Coarse-crossbred wool indicator

5-yr ave 2016-17 2017-18 Source: NZWSI

0.0

1.5

3.0

4.5

6.0

7.5

9.0

China India Italy UK Other

Thou

sand

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NZ clean wool exports (May - Jul)

5-yr ave Last year This year Source: StatsNZ

Disclaimer: This report is published by NZX Rural Limited ("NZX Agri") for your information only. This report does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or financial product. No part of this publication may be redistributed or reproduced in any form or by any means or used to make any derivative work without written permission from NZX Agri. NZX Agri (including its group companies and each of their directors, officers, employees and contractors) shall not be liable (except the extent strictly required by law) for the use of the information contained in this report, however arising. This report is published with due care and attention, but NZX Agri and its group companies accept no liability in relation to the completeness, accuracy or timeliness of this report and its contents.


MONTHLY SHEEP AND BEEF PAGE 11 - APPENDIX


NZ CATTLE SLAUGHTER

OCTOBER 2017

0

20

40

60

80

100


Thou

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New Zealand cattle slaughter


0

5

10

15

20

25

30


Thou

sand

hea

d

New Zealand steer and heifer slaughter


0

5

10

15

20

25

30


Thou

sand

hea

d

New Zealand bull slaughter


0

10

20

30

40

50

60


Thou

sand

hea

d

New Zealand cow slaughter


0

5

10

15

20

25


Thou

sand

hea

d

North Island bull slaughter


0

3

6

9


Thou

sand

hea

d

South Island bull slaughter


0

10

20

30

40


Thou

sand

hea

d

North Island cow slaughter


0

5

10

15

20

25


Thou

sand

hea

d

South Island cow slaughter


0

5

10

15

20

25


Thou

sand

hea

d

North Island steer and heifer slaughter


0

2

4

6

8

10


Thou

sand

hea

d

South Island steer and heifer slaughter





NZ CATTLE SLAUGHTER PRICES

OCTOBER 2017

4.0

4.5

5.0

5.5

6.0


$/kg

CW

North Island bull slaughter price


4.0

4.5

5.0

5.5


$/kg

CW

South Island bull slaughter price


3.0

3.5

4.0

4.5

5.0


$/kg

CW

North Island cow slaughter price


3.0

3.5

4.0

4.5

5.0


$/kg

CW

South Island cow slaughter price


4.0

4.5

5.0

5.5

6.0

6.5


$/kg

CW

North Island prime slaughter price


4.0

4.5

5.0

5.5

6.0

6.5


$/kg

CW

South Island prime slaughter price


4.0

4.5

5.0

5.5

6.0

6.5


$/kg

CW

North Island local trade slaughter price


4.0

4.5

5.0

5.5

6.0

6.5


$/kg

CW

South Island local trade slaughter price


65%

70%

75%

80%

85%

90%

95%


% o

f sla

ught

er p

rice

North Island bull procurement indicator


55%

60%

65%

70%

75%

80%


% o

f sla

ught

er p

rice

North Island cow procurement indicator





NZ BEEF EXPORTS

OCTOBER 2017

0

10

20

30

40

50

60


Thou

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e

NZ beef exports


0

5

10

15

20

25

30


Thou

sand

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e

NZ beef exports to the US


0

3

6

9

12


Thou

sand

tonn

e

NZ beef exports to China & Hong Kong


0

1

2

3

4


Thou

sand

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e

NZ beef exports to Japan


0

1

2

3

4


Thou

sand

tonn

e

NZ beef exports to South Korea


0

1

2

3

4


Thou

sand

tonn

e

NZ beef exports to Taiwan


05

101520253035

Canada China &HK

Japan S. Korea Taiwan US Other

Thou

sand

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e

NZ beef exports (Jul - Sep)

5-yr ave Last year This year Source: B+LNZ

5.5

6.0

6.5

7.0

7.5

8.0


NZ$

/kg

NZ average beef export value (NZD)

5-yr ave 2015-16 2016-17 Source: GTIS

0

5

10

15

20

Canada China & HK Japan S. Korea Taiwan

Thou

sand

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e

NZ beef exports (excl. US, Jul - Sep)


4.2

4.4

4.6

4.8

5.0

5.2

5.4


US

$/kg

NZ average beef export value (USD)





AUSTRALIAN CATTLE SLAUGHTER & EXPORTS

OCTOBER 2017

80

100

120

140

160

180


Thou

sand

hea

d

Australian eastern states cattle slaughter


40

50

60

70

80

90


Thou

sand

hea

d

Queensland cattle slaughter


20

25

30

35

40


Thou

sand

hea

d

NSW cattle slaughter


10

15

20

25

30


Thou

sand

hea

d

Victoria cattle slaughter


0

30

60

90

120


Thou

sand

tonn

e

Australian beef exports


0

5

10

15

20

25

30


Thou

sand

tonn

e

Australian beef exports to the US


0

3

6

9

12


Thou

sand

tonn

e

Australian beef exports to China & Hong Kong


0

5

10

15

20

25

30


Thou

sand

tonn

e

Australian beef exports to Japan


0

5

10

15

20


Thou

sand

tonn

e

Australian beef exports to South Korea


0

20

40

60

80

100

China/HK Japan S. Korea US Other

Thou

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Australian beef exports (Jun - Aug)





US BEEF SLAUGHTER & PRICES

OCTOBER 2017

450

500

550

600

650

700


Thou

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d

US cattle slaughter


70

80

90

100

110

120

130


Thou

sand

hea

d

US cow slaughter


5

7

9

11

13

15


Thou

sand

hea

d

US bull slaughter


200

250

300

350

400


Thou

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hea

d

US steer slaughter


1.6

1.8

2.0

2.2

2.4


US

$/lb

US imported 90CL


1.6

1.8

2.0

2.2

2.4

2.6


US

$/lb

US imported 95CL


1.6

1.8

2.0

2.2

2.4

2.6


US

$/lb

US domestic 90CL


0.0

0.5

1.0

1.5

2.0


US

$/lb

US domestic 50CL


5.0

5.5

6.0

6.5

7.0


NZ$

/kg

US imported 90CL (NZD)


5.5

6.0

6.5

7.0

7.5

8.0

8.5


NZ$

/kg

US imported 95CL (NZD)


PAGE 16 - APPENDIX

NZ SHEEP SLAUGHTER & FARMGATE PRICES



0

200

400

600

800


Thou

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New Zealand lamb slaughter


0

50

100

150

200

250


Thou

sand

hea

d

New Zealand mutton slaughter


0

100

200

300

400


Thou

sand

hea

d

North Island lamb slaughter


0

50

100

150


Thou

sand

hea

d

North Island mutton slaughter


0

100

200

300

400

500


Thou

sand

hea

d

South Island lamb slaughter


0

50

100

150


Thou

sand

hea

d

South Island mutton slaughter


4.5

5.0

5.5

6.0

6.5

7.0

7.5


$/kg

CW

North Island lamb slaughter price


2.0

2.5

3.0

3.5

4.0

4.5


$/kg

CW

North Island mutton slaughter price


4.5

5.0

5.5

6.0

6.5

7.0

7.5


$/kg

CW

South Island lamb slaughter price


2.0

2.5

3.0

3.5

4.0

4.5


$/kg

CW

South Island mutton slaughter price


PAGE 17 - APPENDIX

NZ LAMB EXPORTS



0

10

20

30

40

50


Thou

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NZ lamb exports


0

3

6

9

12

15

18


Thou

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tonn

e

NZ lamb exports to China & Hong Kong


0

2

4

6

8

10


Thou

sand

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e

NZ lamb exports to continental Europe


0

1

2

3

4

5


Thou

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e

NZ lamb exports to the Middle East


0

3

6

9

12


Thou

sand

tonn

e

NZ lamb exports to the UK


0

1

2

3

4


Thou

sand

tonn

e

NZ lamb exports to the US


0

5

10

15

China/HK EU (xcl. UK) Mid East UK US Other

Thou

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e

NZ lamb exports (Jul - Sep)


6.5

7.5

8.5

9.5

10.5


NZ$

/kg

NZ average lamb export value (NZD)


4.5

5.0

5.5

6.0

6.5

7.0

7.5


US

$/kg

NZ average lamb export value (USD)


PAGE 18 - APPENDIX



EXPORT LAMB CUT PRICES

3.0

3.5

4.0

4.5

5.0

5.5


GB

P/k

g

UK CKT leg


5.0

5.2

5.4

5.6

5.8

6.0


EU

R/k

g

EU ABO leg


5.0

6.0

7.0

8.0

9.0

10.0


US

D/k

g

US french rack


10

12

14

16

18

20


EU

R/k

g

EU french rack


2.5

3.0

3.5

4.0

4.5

5.0

5.5


US

D/k

g

Five-rib forequarters


2.5

3.5

4.5

5.5

6.5


US

D/k

g

Lamb flaps


6.0

7.0

8.0

9.0

10.0


NZD

/kg

UK CKT leg (NZD)


15

20

25

30

35


NZD

/kg

US french rack (NZD)


4.0

5.0

6.0

7.0

8.0


NZD

/kg

Five-rib forequarters (NZD)


4.0

5.0

6.0

7.0

8.0

9.0


NZD

/kg

Lamb flaps (NZD)


PAGE 19- APPENDIX



AUSTRALIA SLAUGHTER & EXPORTS

50

70

90

110

130


Thou

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d

NSW lamb slaughter


250

300

350

400

450


Thou

sand

hea

d

Australian eastern states lamb slaughter


20

40

60

80

100


Thou

sand

hea

d

South Australia lamb slaughter


100

120

140

160

180

200

220


Thou

sand

hea

d

Victoria lamb slaughter


10

15

20

25


Thou

sand

tonn

e

Australian lamb exports


0

1

2

3

4

5


Thou

sand

tonn

e

Australian lamb exports to China & Hong Kong


0

2

4

6

8


Thou

sand

tonn

e

Australian lamb exports to the Middle East


0

2

4

6

8


Thou

sand

tonn

e

Australian lamb exports to the US


0

5

10

15

20

Asia(ex. Ch/HK)


Thou

sand

tonn

e

Australian lamb exports (Jul - Sep)


PAGE 20 - APPENDIX



MUTTON

0

4

8

12

16


Thou

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e

NZ mutton exports


0

5

10

15

20


Thou

sand

tonn

e

Australian mutton exports


0

2

4

6

8

China/HK Europe Mid East Taiwan US Other

Thou

sand

tonn

e

NZ mutton exports (Jul - Sep)


0

2

4

6

8

10

12

Asia(ex. Ch/HK)


Thou

sand

tonn

e

Australian mutton exports (Jul - Sep)


2.0

2.5

3.0

3.5

4.0

4.5


US

$/kg

NZ average mutton export value (USD)


25

50

75

100

125

150

175


Thou

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d

Australian eastern states mutton slaughter


Documents

Key Points MONTHLY - s3-ap-southeast-2. · PDF fileMONTHLY SHEEP & BEEF ... been little to test the resilience of sheep or beef values, ... 2.28 5.60 5.00 7.05 0.708 OCTOBER 2017 NZD:USD