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AgriHQ report January 17

LAMB

North Island processor space is tight as we are now seeing the bottleneck following lower slaughter numbers in November and December.

Total North Island lamb slaughter for the first two weeks of December was down 18 percent on the same period in 2020 and the five-year average due to wet conditions holding them back.

In the South Island space is available for booked stock but the extra lambs coming off the drafts are unable to go. There is the odd murmuring suggesting farmers are not always getting 100 percent of their allocations, however, companies are working overtime to enable farmers to process stock and prevent backlogs.

The expectation is for lamb prices to continue to gently ease over the remainder of January.

Export markets have reopened to mixed results. There has been softer pricing noted out of China for some key cuts. Between Christmas and last week, processors took 15-20ckg out of schedules.

BEEF

Our contacts are indicating that North Island prime processor space is tight in most North Island regions with a wait time of up to three weeks.

Dry conditions through Waikato have also led to a sudden jump in cull cow bookings and this could weigh on cow prices in the weeks ahead.

Limited downside in farmgate beef prices recently reflects the strength of overseas demand through this period. There has been little indication of any weakening in key export prices.

The US is only fractionally lower than before Christmas. US imported 95CL bull prices are still sitting well over US$3lb and are over US80clb above this time last year. China and Korea are also strong which is providing a good balance to export returns. The position of the NZD is also providing some support.

GRAIN

Maize crop conditions across the North Island look variable, with the tough sowing season showing up in crop conditions.

Prior to Christmas, some maize crops were looking favourable, however, there is concern that dry conditions in the New Year will compound issues this season, especially during cob fill, and reduce potential yields.

The USDA reports that by mid-2022, China will hold 69 percent of the world's corn reserves, 60 percent of its rice and 51 percent of its wheat — an increase of around 20 percent over the last 10 years.

Fears of a food shortage and a decline in agricultural productivity are the main drivers.

Chinese food imports have risen 4.6 times from the last decade. With a rising food price index and increased famine, Bloomberg reports that this stockpiling is impacting global food prices.

Argentina and the Ukraine have reported massive grain export increases for 2021. Argentina's grain exports are up 28 percent year-on-year, totalling US$32.8 billion, with corn exports increasing 45 percent year-on-year and wheat 29 percent year-on-year.