Silver Fern Farms supply chain manager Dan Boulton says current prices come with the caveat of risks from logistics, covid and labour shortages.
Driven by unfulfilled global demand, beef and lamb prices reached historic highs in December.
AgriHQ senior market analyst Mel Croad says when measured in cents/kg, farmers are currently receiving more than ever for prime livestock, with global demand such that it slowed the traditional New Year farm gate price correction.
“It’s a great news story,” Croad said.
“Values have gradually risen, enabling steady upside to farm gate prices rather than a boom-bust pricing scenario to develop.”
Global market prices for key indicator cuts such as US95CL bull, are currently $US3.10/lb compared to $US2.34/lb a year ago and a five-year average of $US2.20/lb.
In-market lamb values eased slightly in the past week, but are still substantially ahead of previous years.
Legs are selling in the UK for just under £7/kg compared to £5/kg a year ago, and French racks in the US are selling for $US11.75/lb compared to $US6.50/lb a year ago and a five-year average of $8.90/lb.
Flaps in China have eased US20-25c/kg in the past week, but are still selling for $US9.10/kg, $US1.70/kg higher than a year ago and $US2.80 above the five-year average.
Croad says demand is driving prices while a softening in the value of the New Zealand dollar is also assisting returns to NZ suppliers.
“Unfortunately for processors, rising transport and supply chain costs continue to account for a larger slice of the pie,” she said.
Silver Fern Farms supply chain manager Dan Boulton says current prices come with the caveat of risks from logistics, covid and labour shortages.
He expects beef prices to stay firm for the first half of the year, while sheepmeat prices have softened and could continue to do so over the next few weeks.
Alliance sales manager Shane Kingston says prices remain strong and the co-operative is confident that will continue.
Lamb consumption in the UK and EU was pleasing over Christmas and early indications are that it will continue for Easter.
“However, the latest covid outbreak in the UK and Europe is impacting the foodservice sector,” Kingston said.
North America retail and foodservice sectors remain strong, but there is some concern rising inflation could curb consumption and put pressure on prices.
He said the Chinese sheepmeat market is being reset, especially affecting forequarters and flaps, which constitute about 40% of the carcase.
Beef prices remain strong but are under some pressure from the lifting of Brazilian embargo, while US markets remain firm.
He says some importers are concerned about confirming prices and volume given present levels at a 30-year high.
Croad says there are several clouds on the horizon, including Omicron.
“The ever-present threat of Omicron entering the NZ community becomes a greater concern the deeper into summer we head,” she said.
“Processing plants are already struggling for staff.
“If this were to reduce processing space further, then farm gate prices will be impacted.”
Other risks include rising transport costs and China, where there has been some softening in lamb prices, albeit off a very high level.
“We have in the last week seen China soften,” she said.
“Some of that is seasonal, with the lead up to the Chinese New Year on February 1 and with the Olympics next month creating some issues with product shipped now not arriving in time.”
The North Island lamb kill has been slow as lambs have not been yielding as desired due to a tough winter and spring, but the East Coast is now starting to dry and burn off.
She said lamb flows in the South Island appear to be following a more normal pattern.
NZ-born China-based venison importer and marketer Hunter McGregor says covid is impacting the country with travel restrictions over the Chinese New Year and a softening in demand for meat.
Each city or province is dealing with the virus outbreak differently.
“For example, Xi’an has been in a full lockdown, Tianjin and some other cities have tested or are testing the whole city population a number of times,” McGregor said.
“Shenzhen has closed all bars and restaurants for a period, while Beijing and Shanghai only lockdown apartment buildings or individual shops or restaurants and do track and tracing.”
He said pork production is also rising.
