Favourable spring kicks off new pastoral season

14 December 2012

Favourable spring kicks off new pastoral season

Favourable spring weather will help New Zealand livestock farmers
capitalise on continuing strong in-market prices.

MAF has released a half-year update to the annual /Situation and
Outlook for New Zealand Agriculture and Forestry/ (SONZAF) report,
which was published in June.

The update shows the 2011/12 pastoral production season started with
generally favourable spring weather which has meant plenty of feed
for milking cows, ewes with new lambs and growing beef animals.

MAF expects overall pastoral production for the 2011/12 season to be
above average.

Prices for pastoral agriculture have generally remained at
historically high levels during the past half-year, despite the
deteriorating global economy and high exchange rates.

Emerging markets for food and other primary products continue to
grow, but the outlook is for weaker growth in many advanced economies
such as the European Union.

This will take some of the shine off, says Alan Hook, MAF Manager of
Sector Innovation, but prices are still generally well above average.

The dairy sector faces a squeeze between increased supply from other
major exporting countries and slowing demand from major importers
such as China. This saw the milk price for the current season revised
to $6.40 per kg milksolids, down $1.20 on the previous season.

However, the sector’s expected total earnings, at $13.6 billion for
the year to end of June 2012, will still be the highest to date.

The lamb schedule price for the year to September 2011 was the
highest in inflation-adjusted terms since 1977, due to reduced supply
on global markets.

New Zealand’s spring 2011 lamb crop is estimated to be 7 percent up
on last year.

MAF is forecasting weakening export lamb prices as global supply
increases over the next two years.

Wool export prices continue to rise, underpinned by strong Chinese
demand for raw product and demand for finished wool products in the
European Union and the United States.

However, MAF is forecasting that a weaker global economy will slow
wool demand and moderate pricing in the next two years.

In-market pricing for export beef has reduced from the record peak of
April 2011 but still remains relatively high.

This is fuelled by robust demand from Asian markets.

Over the next two years, a weakening global economy and slight
increases in exports from competing countries are expected to drive
New Zealand beef schedule prices downward.

But this will still be moderated by demand for animal protein in Asia
and other developing countries.

New Zealand beef production in the year ending 30 June 2012 is
expected to increase 2.4 percent due to a lift in carcass weight as a
result of favourable growing weather.

/For more information, go to the full half-year report in the
Publications section of the MAF website./

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