Price good, space tight

By Joanna Grigg

In Business6 Minutes

Farmers shouldn’t bank on getting heavy cattle away to the works when they want, even if contracted.

Anecdotal evidence reports farmers were having to hold prime cattle onfarm early February, up to four weeks beyond the original contracted supply date. This had not occurred in previous years at the same time of year. Unit loads of uncontracted cattle in Hawke’s Bay booked pre-Christmas, were still onfarm mid-February.

Reasons given from processors were hold-ups with chilled freight space and labour shortages. With Omicron causing worker stand-downs, this will only worsen.

Back in December, ANZCO Foods sales and marketing general manager Rick Walker, said livestock numbers had been manageable so far, but due to the seasonal production curve, they were actively looking at plans B and C for Q1 2022 when supply from farmers will materially increase.

He said they were now working on Plans D, E and F.

“There are so many variables as to how it will roll out.”

The rate of Covid spread, the policy on close contact stand-down and onfarm feed supplies were just three unknowns.

“We do know that, in Australia, the Omicron outbreak saw a 30% drop in staff at work and a resulting 50% drop in capacity.

“Their government eased isolation period rules but they are still 25% behind in meat production.”

The New Zealand kill season 2021/22 for beef is down on the previous season so there are plenty of animals out there to be processed, he said.

“My message to farmers is do not delay processing for the sake of 10kg – get them killed in a timely fashion and manage your risk.”

Kill space issues

Farmers are having kill space issues already, so this might be easier said than done.

Walker said the natural consequence of less space is a drop in demand for cattle and drop in the spot price.

He said ANZCO was conservative in signing up cattle for 2021/22 contracts although he didn’t know the scale of reduction.

“We are also looking at simplifying the beef cut mix, putting more meat into frozen than chilled and reducing boning work.”

“This does affect the bottom line though.”

In the February Market Update Report ANZCO described it as the start of a period of massive uncertainty during the next two to three months.

It has the “very real potential to impact our already thread-bare labour force, our ability to process animals in line with your expectations and needs, and our capability to get product on trucks and ships to our markets and customers”.

In their pre-Christmas Market Report, Silver Fern Farms said global demand for beef remains strong. This is helped by the United States domestic cow processing forecast to be down 6%. On the flipside Brazil is now allowed to sell young cattle into China, presenting “real downsized risk for beef pricing”. Port clearance in the US remains an issue with the total number of container ships either at berths or waiting offshore increasing 25% since early November.

Trend to lighter cattle

Canterbury saleyard activity seemed unaffected as of early February. There was a small trend to see lighter prime cattle than normal being presented for sale. Mick Withers, Livestock Representative based in Canterbury with Rural Livestock, said the Canterbury saleyard buy and sell patterns didn’t feel that dis-similar to 2021.

“Saleyard beef sales in Canterbury were business as usual.”

Buyers were seeking to top up their store cattle numbers due to good feed being around. Some prime cattle coming off farm were slightly lighter than usual, closer to 550kg than 580kg. This could be motivated by concern about killing space down the track, he said.

There were good numbers of steers in the February 1 Canterbury Park sale, with full races.

“We haven’t seen this for a long time in February.”

The kilogram price is up on 2021– with 600kg steers sold early February topping the sale at $3.29/kg liveweight.

He said there was money to be made with finishing so strong demand for quality stock.

“Last year’s heifer calves are coming to sale now, to make space before the autumn calf sale season begins.”

If killing space was limited, holding cattle was probably not an issue as long as rain arrived.