Analyst Intel

11 September 2020

PULSE | Another soft season for calf rearers

Enthusiasm for calf rearing has taken a knock for the second season in a row after repeated poor returns.

R1 dairy-beef cross steers and heifers and R1 Friesian bulls have spent most of the season trading for prices that are uncomfortably close to the cost of rearing.

The AgriHQ one-year Friesian bull indicator prices are still well below normal levels after drought, Mycoplasma bovis and covid-19 combined to undermine trading confidence.

On a plus side, at least for the calf rearers, the cost of four-day-old calves have followed the market downwards.

Pulse graph 1110

A lack of calf rearing contracts and a depressed bobby calf schedule have weakened feeder calf values. Friesian bull calves sold for as little as $20-30 in sale yards throughout the country. In general, on-farm prices for both beef-cross and Friesian bull calves sold for $30-$40 less than last season.

Meanwhile, the on-farm prices for beef-cross heifer calves didn’t have much room to get worse, so prices are similar to last season’s already depressed level.

Processors are reporting higher than usual bobby calf slaughter rates, despite a smaller national dairy herd to draw these calves from. This suggests that fewer calves have been reared. Although, there are two factors that confound the interpretation of bobby calf slaughter rates.

First, it is possible that earlier calving dates on dairy farms have shifted the bulk of the bobby calf kill earlier. Second, there are now disposal costs for dead calf collection which may incentivise farms that usually euthanise on-farm to switch to supplying bobby calves.

Overall, the net result is likely to be a weaker supply of reared beef-cross cattle and Friesian bull weaner stock this season. 

This will reduce the finished cattle supply in two-year’s time, or even sooner since the calf rearers were not exactly jumping to buy feeder calves last season either. When we also consider the increased beef cow cull during the drought, higher exports of beef breeding heifers to China, and restrictive new laws for grazing cattle, then it is looking very likely that NZ beef production will be constricted in the future.

Nicola Dennis