Dairy Meats bobby calf payout forecast reviewed

For Immediate Release October 17 2002

Dairy Meats bobby calf payout forecast reviewed

Dairy Meats NZ Ltd has continued to review its forecast of total payout for bobby calves for the current season, and whilst it is expecting the final payout to ease from early-season predictions, it believes it will remain well above the levels indicated by various meat schedules.

The company's latest forecast is about $23 for an average lightweight carcass, about $46 for an average medium weight carcass, and for a 21 kg heavyweight carcass (about 42 kg live-weight) a net return of about $75.

The value of commodity veal in the United States has weakened slightly because of increased competition from imported veal, plus a supply excess of domestic calves. As well, drought conditions in the US have pushed up grain prices making beef rearing less attractive, and that has resulted in increased numbers of young animals becoming available to the general processing pool. The New Zealand dollar remains reasonably stable against the US dollar and this has helped to buffer export receipts as they are converted to NZ currency.

Japan and Europe remain difficult markets for veal.

The downturn in the Japanese economy has put pressure on domestic sales, resulting in higher than expected inventories in the market and pressure from importers to ease back new sales volumes and values. In Europe, market values for veal have weakened because of excess inventories of formula-fed veal created in part by the early stages of the recent BSE and Foot & Mouth concerns, when animals were grown to much larger than normal size. The cost of GATT licenses for imports remains uncertain, further tightening achievable values for New Zealand imports.

For other commodity products such as skins and offals, there has been little change in market demand or value from last year.

Dairy Meats is continuing the drive into added-margin markets with a range of new products such as portion-controlled veal products, ready-made stocks and sauces, and pre-cooked portioned products. It is also continuing to expand its enzyme extraction abilities with new technologies that enable a greater utilisation of the calf, and which also allows its technical and processing skills to be applied to other animal types.

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