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the country

Sheep and beef farmers are poised to capitalise on excellent pasture production after the moist end to the spring.

PGG Wrightson South Island Livestock Manager Shane Gerken says most districts experienced good spring growing conditions, with an extra boost over the past few weeks. 

“Although NIWA was predicting a dry summer, after the recent prolonged wet spell through much of the country, that looks unlikely to commence any time soon. Farmers are looking to capitalise on some exceptional pasture production.

“For sheep and beef farmers, the main spring focus was lamb finishing and cattle sales. As the lamb schedule is holding up at record highs, most sheep farmers remain positive, and store lambs will be highly sought after. 

“Lambing percentages are also at record levels, with plenty of sets of twins surviving. For that reason, lambs may be slightly slower to reach required weights this season, despite the quantity of feed available. Demand for store lambs reflects the ongoing confidence in the lamb schedule, as well as the positive feed situation,” he says. 

Meanwhile, in the cattle market, farmers are showing a preference for traditional well-bred beef breeds.

“These are achieving a premium over dairy beef. Rain has also strengthened that market, with an abundance of cattle offered for spring sale. Compared to last year, cattle prices have therefore eased slightly, reflecting where the schedule has gone. Tight killing space at the works has also negatively impacted pricing.

“Hundred kilogram bull calves started to sell in late spring. In an ongoing trend, buyers showed a marked preference for single origin animals. This is a response to the risk of mycoplasma bovis. Traceability has become a more highly favoured attribute this season. 

“Although prices for prime beef are down on where they were last season, cattle are still likely to sell well through the summer, albeit at slightly lower prices than last season,” says Shane.

Subdued spring market set for summer revival

Recently published Real Estate Institute of New Zealand (REINZ) statistics confirm what we are seeing in the marketplace: it has been a cautious and subdued spring rural property market.

Several factors are contributing, with dairy sector uncertainty the most apparent.

Compared to the previous 12 months, in the year to September 2018, dairy property transactions were down by 8.4 per cent. In the same period REINZ’s median price for dairy property fell by 18 per cent while the nationwide dairy farm price index, which accounts for differences in farm size and location, fell by 15 per cent. Although this trend is less apparent in some regions, most other statistics indicate a similar softening in dairy property.

Plenty of dairy properties are on the market nationwide. Although there is interest, buyers have yet to demonstrate any great commitment or urgency to secure these.

At the upper end of the dairy sector, for farms exceeding 250 hectares, with comprehensive infrastructure to support a larger herd and more intensive inputs, new overseas investment rules have taken a significant proportion of potential buyers out of the market. Properties with these specifications have not sold in recent years for less than $12 million. Those with sufficient equity to purchase in this price bracket have substantially reduced in number and are now restricted to local interests only. With less buyers, for the New Zealand-based purchasers who remain, reduced competition has eliminated any pressure to buy.

Lack of buyer enthusiasm has flowed through to the market for smaller dairy properties.

Meanwhile, the sector remains wary of Mycoplasma bovis. Investing in dairy land while the industry is still coming to grips with this significant risk would take considerable conviction.

Elsewhere in New Zealand agriculture, plenty of positives remain. Meat schedules are strong; relative to most of our trading partners the dollar is encouraging for our primary produce exports; interest rates show no sign of shifting from historical lows; and global demand for our horticulture underpins sustained optimism in that sector.

Despite the uncertainties outlined above, a payout forecast of $6.50 means a profitable season is even in prospect for most dairy farmers. Despite that, and some high-quality listings, the spring rural property market has not resulted in as many sales as might have been expected.

Whenever any market experiences a subdued period such as this one, it is generally due to a mismatch of price expectations between buyers and sellers. Eventually the market will react to the more obvious signals, value expectations on both sides will come into line, and sales will proceed.

With many excellent properties on the market, across all sectors, and some of the most prominent of those likely to sell before Christmas, that should happen in the next few weeks.

If you require further guidance on the evolving rural property market, my colleagues at your local branch of PGG Wrightson Real Estate are standing by to assist, and are ideally placed to help you achieve your business objectives, with professional, impartial, expert advice.

We look forward to hearing from you.


Peter Newbold
General Manager
PGG Wrightson Real Estate Limited

◰ Read more in our Latest Rural Property Pulse publication

 

With the holiday season just around the corner it's time to take a look at what's been happening around the country.

Sheep & Beef

Steady rain throughout most parts of the South Island, has been welcome in Canterbury but saturated ground conditions in Otago and Southland has seen widespread flooding.

The effects of the recent rains for the store cattle market has seen prices rise by .30 cents kg. The sheep market pricing continues to go from strength to strength as processors look at filling market orders. Store lambs have also met with solid demand as farmers compete for what is on offer.   

Overall the South Island is in a good position overall feed wise, although much needed sunshine is needed in some parts of Otago to dry out pastures.

Dairy

The dairy season is sluggish at best, the continued drop in GDT auction price and lack of farm sales are not instilling any confidence in the sector. Mixed weather across most of the country is also not helping.

On a brighter note we are experiencing some positive late season activity with farmers now electing to use service bulls rather than continuing through the season with AI.

There are some good quality herd listings on Agonline at present and heifer listings are expected to increase over the coming weeks – if you are looking for any replacement dairy animals please contact your local PGG Wrightson Dairy rep.

Genetics

With the Ram selling season well and truly under way in the North Island and coming to a start in the South Island, we have seen a stronger than usual demand for terminal rams. Assisted by the lamb and mutton schedule which is expected to remain high up towards Christmas.

Mana Romney’s elite sale kicked off a string of successful sales so far in the lower North Island with 30 out of 30 Rams sold for an average price of $1,924 (including five Rams going stud). Confidence is showing in the sheep market, as commercial farmers are willing to pay up to $2,200 for their top pick.  Scott Linklater also saw his average price increase this year at his Elite Charollias Ram sale averaging $1,106 with a full catalogue clearance. The top stud ram selling for $2,900 with help from strong commercial backing. 

There is never a better time to get in contact with your local genetics specialist or commercial rep to get the most from your flock. Selecting the best genetics will increase performance for your breeding program.

PGG Wrightson Real Estate's GM talked to The Country's Jamie Mackay on several topics including the dairy prices the south and the subdued spring market, set for summer revival.

Also available is the summer 2018 Issue of Rural Property Pulse. Produced quarterly for nationwide distribution, this publication contains relevant and up-to-date information on rural real estate.  Read the summer issue here.