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1 AgLetter AgLetter AgLetter AgLetter AgLetter 11 th July 2005 Dry Spell A Relief A week of settled weather over much of the country last Inside: Alternative Shearing Policies week allowed those water-logged properties a chance to dry out and have a bit of a breather. Soil temperatures have bounced back with the mild weather. This combined with a bit of sunlight has allowed for some reasonable grass growth over the last few days. Store Markets Red Hot A shortage of store cattle in the North Island saw cattle prices firm 10-15c/kgLW last week. A good gallery of buyers turned out to the Stortford sale. 18-month steers were making $1.80-$1.90/kgLW and bulls $1.85- $1.95/kgLW. While there is a big demand for store cattle, a premium is being paid for better quality animals. 14,000 ewes were yarded in Ashburton last week with strong buyer demand. Top 5yr ewes were making $125, mediums $95-$110 and lights $85. Top 2th ewes made $130-$150 and MA Ewes $115-$125. Buyers have become very selective with their purchase of in-lamb ewes in North Island sales with poor ewes with low mouths being heavily discounted. Store lamb prices firmed 5c/kgLW in the North Island and 5-10c/kgLW in the South Island. Top 35-40kg lambs are making $2.00-$2.10/kgLW in the South Island and $1.95-$2.05/kgLW in the North Island. No Change In Export Prices Export prices have been unaffected by the significant drop in the exchange rate last week. Export bull and steer operating prices are around $3.40-$3.45/kgCW and $3.35-$3.40/kgCW respectively this week and local trade $3.30-$3.40/kgCW in the South Island and $3.25/kgCW in the North Island. Killing space for ewes is restricted as a result of a flood of lambs into the works as feed disappears. Many of the meat companies are not taking any ewes in at the moment. Works ewe prices have dropped -10c in North Island this week. Lamb operating prices remain steady at $4.35/kgCW in the South Island and $4.55-$4.60/kgCW in the North Island this week. PGG/Wrightson Merger Pyne Gould Guinness Ltd and Wrightson Ltd announced their intention early last week to merge their businesses if three quarters of their shareholders are in favour of the the proposal. The merger is also subject to commerce commission approval. This expected to take place in early September. If this proposed merger goes ahead the company will become the largest rural services company in the country, with approximately 15% of the market share (which seems hard to believe). Exchange Rate Slides The $NZ depreciated 4.1% against the $US over the last week to close at around It hasn t been at this level since the beginning of April this year. The $NZ has lost 6.1% since the middle of June. AT A GLANCE -2 weeks -1 weeks This week TREND CHANGE Store Lamb (30-35 kg) $2.00-$2.10 $2.00-$2.10 $1.95-$2.05 UP +5c 17 kg PM Lamb $4.55-$4.60 $4.55-$4.60 $4.55-$4.60 NC 18-Month Bulls $1.70 $1.75-$1.80 $1.85-$1.95 UP +5-10c P2 Steer (295 kg)(schedule + Premium) $3.35 $3.40-$3.45 $3.40-$3.45 NC Bull (295 kg)( ) $3.35 $3.35-$3.40 $3.35-$3.40 NC Local Trade Beef (220 kg) $3.25 $3.25 $3.25 NC AP Stag 60 kg $3.40 $3.40 $3.40 NC Strong Wool Indicator NC 90-day Bill Rate 7.03% 7.05% 7.05% NC US Bull Price (c/lb US) 139 c 141 c 141.5c UP +0.5pts $NZ/ UK UP +15pts $NZ / $US Exchange Rate DOWN -86pts Baker & Associates (Wairarapa) Limited, Farm Management Consultants & Rural Valuers P O Box 900, Masterton, Phone (06) , Fax (06) , team@bakerag.co.nz
2 Alternative Shearing Policies A 15% increase in shearing costs and declining wool prices has put the squeeze on the profitability of harvesting wool. This is making woolgrowers take a serious look at their shearing policies. In this article we discuss the factors that influence your farms shearing policy. We outline the advantages and disadvantages of those alternative shearing policies and present a costbenefit analysis for comparison. In modern, high performance flocks, management and production benefits may carry more importance than the relative costs of different shearing systems. Personal preferences, attitudes to risk, climatic factors and sheep breed will also have an influence. We have assessed the value of the management benefits required to equate to 12-month shearing pre-lamb. FACTORS THAT INFLUENCE SHEARING POLICIES Sheep Productivity In the pursuit of higher lambing performance, there has been a trend for more 2 nd shearing and 8-month shearing policies. - Selection for higher fecundity and growth rate has introduced genetics for less wool cover around the face, tail and leg areas and in many cases, lower fleece weights. - There s a perception that fly strike and dags are more easily controlled with shorter-wooled sheep. - Research suggesting that shearing ewes mid pregnancy ( days) can increase lamb birth weight and lamb survival has seen mid-winter shearing policies find more favour. - There is a general perception that pre-lamb shearing reduces ewe and lamb death rates through bearings, dystokia and cast ewes. - There is a preference for having the wool off ewes mid-winter because it is easier to judge ewe condition at that critical pre-lamb feeding stage. - More hoggets are being mated and they are also being shorn in the winter, as opposed to September-October. Climatic Influences While there are animal productivity gains from winter shearing programmes it is becoming more and more difficult to get shearing done on time: - Increased demand on shearers over a short period. - Wetter winters in the North Island over the last two winters have compounded the problems. - This has created a very STRESSFUL environment for woolgrowers, shearers and sheep. Last year, some sheep were shorn too close to lambing, which caused high death rates in the very wet conditions. - The days of elevated feed demand that follows mid-winter shearing can be difficult to accommodate, especially if nitrogen responses don t kick in. Shearers There are fewer shearers to shear the sheep and the average age of shearers is increasing. The demand for shearing has become more condensed with recent trends in shearing patterns. Ewes are getting bigger and heavier. As a result, shearers are commanding better rates, better working conditions and premiums for using cover combs. Inflation in direct costs such as fuel, ACC and holiday pay being passed on to the woolgrower. SHEARING POLICIES: PROS AND CONS Twice Yearly This policy has become more popular for reasons mentioned above. In most situations with a twice yearly shearing policy the ewes are shorn post weaning in December/January and then again in June/July to allow for enough to growth in between.
3 Advantages: - Flystrike is minimised in warmer summer/autumn areas - Ewe productivity improves over lambing (higher lamb survival, fewer ewe deaths). - Better cash flow over the winter. - Improved wool quality - Better feeding management because stock condition can be better judged - Ease of management not having to shear ewes with lambs at foot, shorter wool takes less time to dry out in the winter. Disadvantages: - Higher cost in more shearings and use of cover comb in the winter. - Use of composite breeds reduces wool production and increases risk of not getting an adequate staple length. - Climatic risk in winter shear in not shearing at optimum time. - Increased demand on feed from ewes shorn in winter. 8-month Shearing This policy was popular in the 90 s and is being looked at again as an alternative to double-shearing. Timing of this could be: - Pre lamb late July/early August, Nov/Dec, late Feb/early March - May, October, January The first variation has the advantage of better fitting the management cycle of seasonal operations but for some farmers the pre-lamb shear will be a major obstacle. The second variation will suit those areas more prone to harsh winters but it runs the risk of shearing too close to mating, putting unnecessary stress on the ewe. October shearing has the hassle of lambs at foot and may impact on their weaning weight. Advantages: - Split flock shearing reduces the problem of having to shear all ewes at the same time. - Reduced exposure to winter shearing with only half of the flock being shorn. - With the split flock the older/b mob ewes can be pre-lamb shorn and sold with lambs at foot or at weaning. - Longer staple length compared to double shearing. Disadvantages: - Two clips of wool received every second year (non-split policy) - Increased cost with cover comb shearing half of the flock in winter. - Increased feed demand for a proportion of the flock. - Disruption to rotational grazing pattern with split flock, especially in winter. 12-month Shearing This policy is still used by many farmers. Most common practise is to either shear ewes at weaning or pre lamb. Advantages of pre-lamb shearing: - Reduced workload - Reduced incidence of cast ewes - Optimal time to prevent wool break when fibre diameter is at its thinnest point and before the stresses of lactation. - Wool colour generally better than late spring. - Ewes easier to manage during lambing and cull ewes can be sold with lambs at foot or at weaning. Disadvantages of pre-lamb shearing - Risk of adverse weather leading to ewe losses from exposure - More difficult to get sheep dry with full wool - Increased cost in cover comb shearing - More pressure on feed supply and demand - Greater risk of flystrike in late summer - Ewes perceived not to tupp as well with 8-months wool on (not proven) - Pre-tup crutch more expensive and use of marking crayons on full wool undesirable.
4 Advantages of December shearing: - Fits in well with seasonal operations e.g. post weaning and pasture growth. - It is a safe time of the year to shear - Discolouration of the wool is minimised if shear November/December Disadvantages of December shearing: - A proportion of the clip can show a recognisable break or weakness in the tensile strength of the staple. Coarser wools are subject to soft cotting and hard cotting. - Later shorn wool can become poorly coloured in the warmer December/January conditions. - Heavily wooled ewes more prone to getting cast at lambing time. - Ewe deaths higher. - Delays of up to 3 weeks in selling cull ewes post weaning. SHEARING POLICIES PROFITABILITY We compare the cost/benefit of each policy to work out the most financially viable shearing policy to use. The shearing costs are based on full contract prices and have been taken from an average of shearing contractor rates in the Wairarapa. They do vary below and above these costs used. Some farmers may elect to crutch the ewes themselves to save on costs. The $/kg wool prices used are based on current market wool prices so that each policy can be compared on the same value basis. The kilograms of wool produced per ewe will vary between properties and year to year with the breed of sheep used, differing management practises and climatic influences on the ewes. The analysis below compares everything on a clean wool sale price. 12-Month Policy Weaning Cost $/hd Income Kg/hd $/kg $/hd Shearing - Shearing 1 $3.10 Wool A Fleece (Clean $3.75 $11.40 inch) Full Belly Crutch 1 $0.90 Oddments 0.76 $2.50 $1.90 Tip Crutch 1 $0.60 Total 3.8 $13.30 Total $4.60 (35% of income) Profit per ewe $8.70 Profit per 1000 ewes $8, Month Policy Shearing Pre-Lamb ( days of pregnancy) Cost $/hd Income Kg/hd $/kg $/hd Shearing Pre Lamb (Cover 1 $3.18 Wool A Fleece (Clean $3.85 $11.40 comb) inch) Dirty Crutch 50% of 0.5 $0.45 Oddments 0.76 $2.50 $1.90 ewes Tip Crutch 1 $0.60 Total 3.8 $13.30 Total $4.23 (32% of income) Profit per ewe $9.07 Profit per 1000 ewes $9,070
5 Twice Yearly Shearing Pre-Lamb and Weaning Cost $/hd Income Kg/hd $/kg $/hd 1 $2.95 Wool Fleece (Clean 3-5 inch) 3.25 $3.43 $ $3.03 Oddments 0.65 $2.50 $1.63 Shearing Shearing - Weaning (Winter + Cover Comb 8c) Tip Crutch 1 $0.60 Total 3.90 $12.78 Total $6.58 (51% of income) Profit per ewe $6.20 Profit per 1000 ewes $6,200 8-Month Shearing Policy Cost $/hd Income Kg/hd $/kg $/hd Shearing 1.5 times/yr 1.5 $4.48 Wool Fleece (Clean 3-5 inch) Oddments $3.56 $2.50 $11.11 $1.58 Tip Crutch 1 $0.60 Total $5.08 Total 3.75 $12.69 (52% of income) Profit per ewe $7.61 Profit per 1000 ewes $7,610 SUMMARY Shearing Policy Profit per ewe Profit per 1000 ewes Value of Management Benefits Required to match 12-mnth shearing pre-lamb 12-Month Policy Shearing Pre-Lamb ( days of pregnancy) $9.07 $9, Month Policy Weaning Twice Yearly Shearing Pre- Lamb and Weaning $8.70 $8,700 +$370 $6.20 $6,200 +$2,870 8-Month Shearing Policy $7.61 $7,610 +$1,460 The comparisons above indicate that the 12-month shearing policies are more profitable than the twice yearly and 8- month policies. However there are substantial management advantages in some of the alternative policies (as mentioned above) PRODUCTION BENEFITS OF PRE-LAMB SHEARING Consider the following: Scenario: A twice-yearly shearing policy (Dec/Jan & June/July) MA Ewe flock. Scanning 170% and 140% lamb survival to sale. Ewe Deaths If the ewe death rate over lambing can be reduced from 4% to 3% (or 10 ewes) by pre-lamb shearing, this will generate extra revenue of: 10 ewes x 3kgs A fleece wool x $3.60 = $ ewes x 140% lamb STS x 27kgLW x $1.95 = $740 Value of 10 MA $80 = $800
6 Lamb Birth Weight If lamb birth weight can be increased by 0.5kg as a result of pre-lamb shearing this will result in improved lamb survival: 3% better lamb survival from 1700 potential lambs (51 lbs) x 27kgs x $1.95 = $2,685 Higher lamb weaning weights: 1400 x 0.5 kglw x $1.95 = $1,365 Ewe condition If scanning results can be increased by 2% as a result of a 1kg increase in ewe liveweight and condition score through better animal health and less heat stress with shorter wool 2% increase x 1000 ewes x 27kg lamb weaning wgt x $1.95 = $1,053. The combined benefits in shearing twice yearly have the potential to return an additional $6,750, which covers the additional cost of twice-yearly shearing twice-over. PRODUCTION LOSSES FROM PRE-LAMB SHEARING Increased post shearing intake Extra 0.5kgDM/hd/day eaten over 15 day period post winter shearing 0.5kgDM/hd/day x 15 days x 1000 x 0.15c/kgDM = $1,125 Ewe Deaths Not having adequate feed/shelter to put ewes onto post shearing and hit by storm 10 ewe deaths x 140% lambing x 27kg lb weaning wgt x $1.95 = $740 Two Irish hunters got a pilot to fly them to Canada to hunt moose. They bagged six. As they started loading the plane for the return trip, the pilot said the plane could take only four moose. The two lads objected strongly. "Last year we shot six, and the pilot let us put them all on board; he had the same plane as yours." Reluctantly, the pilot gave in and all six were loaded. However, even with full power, the little plane couldn't handle the load and went down a few moments after take-off. Pulling themselves out of the wreckage, Paddy asked Seamus, "Any idea where we are?" "Bejasus, I think we're pretty close to where we crashed last year." The lions practice was delayed nearly two hours today after a white powdery substance was found on the field. Police and forensic investigators were called in to investigate. After a complete analysis, the forensic guys determined that the white substance unknown to the players was the goal line. Practice was resumed after special agents decided that the team was unlikely to encounter the substance again. What's your wife trying to tell you if she's wearing a Lions shirt in bed?? You ain't going to score...ever!!
7 EXPORT BEEF PRICES (INDICATIVE FARM GATE PRICES) Week Commencing 11-Jul-05 GRADE EXAMPLE PRICE NET GRADE EXAMPLE Latest PRICE NET WEIGHT CHANGE (After Charges) WEIGHT CHANGE (After LAST LAST Charges) P STEER M COW / / / / / Over / / / BULL P HEIFER 195.5/ / / / / / / / / / Over P COW / / / / ASSUMED CHARGES = Levies $ / Freight (Paid) VENISON PRICES 40-45kg stag $2.75 /kg kg Stag $3.20/kg kg Stag $3.40/kg Hinds 10 c on these INDICATOR LAMB SCHEDULE 11th July 2005 (Grade) YL1 PL1 YL1 PL1 YL2 PL2 YL2 PL2 PM1 PM2 PM2 PM3 PX1 PX2 (C/Weight) (LW 42%) Net Price $41.0 $41.0 $45.1 $45.1 $50.4 $50.4 $54.6 $54.6 $63.7 $68.3 $72.9 $77.4 $82.0 $86.5 c/kg LW c/kg CW Season Lambs Net Price on farm including premiums. 0.8 kg shorn pelt NOTICES Grazing Wanted: Maintenance grazing wanted for light R2yr Cattle. Any numbers. Ph (06) Honda 350 4x4 For Sale. 22,000km, 1600hrs. Ph Glen (06)
8 W & K WOOL REPORT (From the W & K Auction Catelogue) 23-Jun-05 Strong Seg. Indicator 362 (-9c) Type Length SALE PRICE Yield SALE PRICE NET GREASY CHANGE ON (Clean) (Greasy) PRICE LAST SALE (On Farm *) (c/kg clean) FLEECE WOOL 38F2D115 Full Fleece "4"-6" % F3D115 Full Fleece "4"-6" % SECOND SHEAR 38F1Q Good 2nd Shear 2-3" % F1O Good 2nd Shear 3" % F1K Good 2nd Shear 3-4" % F1G Good 2nd Shear 3-5" % F2Q Med 2nd Shear 2-3" % F2O Med 2nd Shear 3" % F2K Med 2nd Shear 3-4" % F2G Med 2nd Shear 3-5" % HOGGETS 32F2R Hoggets 1-3" % F2Q Hoggets 2-3" % F2M Hoggets 2-4" % F2R Hoggets 1-3" % F2Q Hoggets 2-3" % F2M Hoggets 2-4" % ODDMENTS 37B2M80 Clothing Odds 2-4" % B3Q60 Clothing Odds 2-3" % B3R50 Clothing Odds 2" % B3G100 Combing Bls 3-5" % P3G100 Combing Pcs 3-5" % Store Lambs (2004) STORE MARKET REPORT SOUTHERN NORTH ISLAND / EAST COAST (S) Tops kg $1.95-$2.05 Firmer (S) Mediums kg $2.05-$2.15/kgLW Firmer (S) Lights (<28 kg) $2.10-$2.15 Firmer Ewe Lambs 10-15c less than male prices. CANTERBURY (S) Tops (35-40 kg) $2.00-$2.10 kglw. Steady (S) Med (30-35 kg) $1.90-$2.00 Steady (S) Lights (25-30 kg) $1.60-$1.70/KgLW Steady Works Ewes Local Trade Ewes Scanned in-lamb ewes 18-Month Steers 18-Month Heifers 18-Month Bulls $2.15-$2.20/kg LW Weaker Medium $47-$48 Weaker Tops $90-$100. Average $70-$80 Poor $55-$70 (S) kgs = (Good) $1.85-$1.90 kglw kg = (Good) $1.80-$1.85. Firmer (S) kg $1.65-$1.75. Firmer (S) kgs $1.95/kgLW = $ = $1.75-$1.80/kgLW Firmer VIC Cows (S) Good quality MA $650-$800 (S) Large framed heavy cows $800-$900 Weaner Steers (S) Good Trad: $2.20-$2.25. Steady Weaner Heifers (S) $1.75-$1.80 Steady Weaner Bulls (S) $2.10 Steady Weaner Friesian Bulls (S) $2.15 Steady Hyb. Wnr. Stags $1.80-$2.00 /kglw Deer Red Wnr. Stags $1.70-$2.00 /kglw Hyb. Wnr. Hinds $1.70 /kg LW Red Wnr. Hinds $1.10 /kg LW Works Ewes $35-$50 Steady Butcher Ewes $65-$70 Steady Top SIL Ewes: $125-$150 Av. $95-$110 (S) $1.80 kglw Steady 450-$500 $1.70-$1.75 Firmer (S) $ $1.70 Steady (S) $1.60 /kglw Firmer $1.40/kgLW Weaker (S) Med $700-$800 Better: $800-$850 (S) $2.20 Steady (S) $1.90 Steady (S) $2.00-$2.10 Steady Hyb. Wnr. Stags Red Wnr. Stags Hyb. Wnr. Hinds Red Wnr. Hinds $2.00/kgLW $1.70/kgLW $1.70/kg W $1.30 /kglw DISCLAIMER This newsletter is confidential to subscribers. It is not to be reproduced or distributed to any other party without express prior approval. The opinions and facts provided are based on verified data believed to be correct at the time of writing. Prices and quotes will however be subject to change without notice. Baker and Associates (Wairarapa) Limited accept no liability for any loss or damage that may result from actions or failure to act upon information provided herein.
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