“If everything goes as it looks, things are looking up,” GlobalHQ analyst Nicola Dennis said ahead of the latest schedule pricing round.
Continuing gains for lamb are a slight surprise because Chinese buyers might be expected to try to bring prices back as supply to the processing plants steps up but that isn’t happening.
Historically, a weekly 10c/kg fall in lamb prices at this time of year is considered a healthy signal as supply starts to build up and if the market strength does continue it raises the risk of a more abrupt correction when the supply volumes ratchet up into December.
It could be as much as 30c/kg, which might dismay farmers, especially those who have booked stock in a good time ahead.
The market strength highlights the sustainable nature of booming Chinese demand with lamb flaps still at stratospheric levels, Dennis said.
It means prices have remained high for last season’s lambs, which are being pushed in for processing before getting their second-year teeth.
“It can unwind quickly but there’s no sign of that yet.”
Going into last week the North Island lamb indicator was looking to lift 5c to $8.70/kg, about 30c/kg higher than this time last year, according to GlobalHQ figures. In the South Island the indicator was looking like $8.60/kg, compared to about $8.10 at this time last year.
Cooler weather appears to be holding back supply of new season lambs in the North Island and the good survival rates mean there are plenty of ewes looking after twins and triplets.
However, reports suggest labour shortages are preventing works increasing capacity.
Lambs going into the works are in good condition with strong carcase rates.
Cool weather coming out of winter slowed the finishing of last season’s lambs in lower parts of the South Island.
Bull prices are strengthening, again on Chinese demand, and this time in stiffer competition with United States buyers, Dennis said.
“The market is looking interesting with US manufacturers able to get their domestic 50CL beef a bit cheaper so that frees them up to go in search of more 95CL for blending and that’s what our bulls are.”
Depending on how many bulls are in the paddock there is talk the price might push above prime prices.
Store market indications are there might not be a big number of bulls about, especially in the North Island. Mycoplasma bovis precautions mean not many bulls are being sent north from the South Island.
Procurement levels are behind last year so Dennis expects processors to have more room to move on prices.
There looks to be a good supply of prime steers though here though cooler weather has again slowed finishing rates.
