10 Nov 2014

Sheep, beef prices now outstrip dairy

6:30 pm on 10 November 2014

Sheep and beef farmers are getting higher prices for their products than dairy farmers for the first time in many years.

While sheepmeat, beef and wool prices have all lifted, milk prices have slumped from last season's record levels.

Dairy cooperative Fonterra's current forecast milk price of $5.30 per kilogram of milk solids, for instance, is widely predicted to fall further.

But Rob Davison from Beef + Lamb New Zealand's economic service said even at the current level, the milk price had fallen below the per kilo returns for lamb, beef and wool.

"This time of the year prices for lamb and steer are quite high because it is the low production point of the year - the main flow hasn't come on stream yet. But we're looking at lamb at the moment quotes around about $6.50 in the North Island, which is well ahead of the $5.30 for dairy. If we're looking at steer, we are looking at quotes too with tight supply around about $5.75 up to 5.90 I hear at the moment."

Mr Davison said those lamb and beef price returns look like topping the milk price - even when prices are averaged out through the season.

"Lamb at 6.50 at the moment. We think the season average price when the main flow comes on, that would probably pan out round about $5.60 - may do a bit better than that, but that's still above that dairy price.

"The last time that happened was back in 2000, 2003 and 2008/09 lamb prices were up there with equal to dairy.

"If we are looking at beef, you have to go back to 1991 and then way back to 1984/5 - only those two points were beef prices equal to or a bit above dairy.

"If we are looking at wool, cross-bred wool at the moment we would probably look at something like $5.40 a kilogram clean, which is about $4 greasy at the moment. But on a clean basis that is above dairy prices too, so a pretty unique set of circumstances."

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