Stock prices align to lift the bar for sheep and beef farmers

By Iain Hyndman

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Matthew Cotton and Coulton Wilson (rear) happily trim the stock now that shearing is profitable again and helping to lift farmers' bottom lines.
Matthew Cotton and Coulton Wilson (rear) happily trim the stock now that shearing is profitable again and helping to lift farmers' bottom lines.

Medium sized farming operations could be enjoying up to an extra $80,000 gross earn this season with stock prices remaining at unexpected highs.

While it may be wishful thinking to call this the new norm, Father Christmas certainly delivered on farmers' wish-lists of rain, sunshine, rain and high schedules.

Independent Whanganui livestock operator and market commentator, David Cotton, described the season as outstanding.

"What more could a farmer in our region wish for? It has been a bonanza with an abundance of feed in the district," Mr Cotton said.

"How quickly things can change with 140mm-200mm of rain. I recorded 141mm at Kai Iwi, the second highest rainfall I have recorded at my place in 24 years (2003 — 157mm) with November and December being the lowest rainfall I have ever recorded (16mm and 27mm).

"The prime lamb schedules held on well over the dry period of December considering how tight space was over Christmas/New Year with some plants not open for business. The lamb schedule opened the season back in October at around $7.20/kg. My rule of thumb is the start price will drop by over one dollar a kilo by late December/early January making it hard to trade early lambs for a profit — the schedule drops faster than you can fatten them."

But what is the new norm, he asked rhetorically.

"Last week the lamb schedule was back at $7/kg. This week, with the last of the Easter kill, extra premiums at some plants have the schedule back to $7.20/g, although talk on the street is that 30c-50c/kg could be pulled from the schedule as the last boat sails," Mr Cotton said.

"But with plenty of grass, low sheep numbers, autumn crops in the ground to push lamb weights over 20kg, may be of little concern to farmers this year.

"Look at the difference in the market place from February 5, 2017. Prime lamb was $5.15/kg, up $2.05/kg to $7.20/kg. That equates to an 18kg dressed carcass at $36.90 a head. Mutton was $3.10/kg and this season with contracts out the minimum price is $5/kg, up $1.90/kg equating to a 28/kg animal at $53.20 a head. Store 30kg lamb were $2.10/kg up $1.05/kg to $3.10/kg for $31.50 a head.

"It means a big boost in gross returns, possibly up to an extra $100,000 for medium operations," Mr Cotton said.

The good news story continues with the cattle markets all up on February, 2017 levels, both schedules and liveweight up by about .30 cents/kg.

"My knowledge of the wool market is limited at best, but I did sell my ewes wool for $2/kg in the January auction, which was a lot better than clients who told me what they received in December, which was as low as $1.60/kg.

"I'm hearing $4.50/kg to 5/kg for lamb's wool, add in low interest rates, and times are good down on the farm, but is this the new norm — I'd like to hope so.

"And so much for the $6 lamb schedule that one of the major meat companies predicted in December for the January/February period. Sure, I do think there is a correction to come to both store and prime markets, but the bar has been raised a notch or three," Mr Cotton said.

- Wanganui Chronicle

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