The impact on sheep and beef farm incomes is big, with average pre-tax profits forecast at $126,300 for the export year to September 30, a 39% increase on the 2016-17-year, Beef + Lamb NZ said in its mid-season report.
Lamb export returns on an average per-tonne basis are expected to be 14% higher than last year at $9800 a tonne, chief economist Andrew Burtt said.
Lamb exports are expected to exceed $3b for the first time on steady export volumes. Beef exports first passed the $3b mark in 2014-15, and even though down marginally on a year ago are still expected to total $3.2b for the year.
Mutton export figures are added to lamb numbers for total sheep returns, with revenue expected to be up 22% overall, year-on-year.
The average farmgate price for lamb is forecast at $6.61/kg, or $122 a head. This is a 15% lift over last year, because of a higher proportion of lambs processed at good prices earlier in the season, Burtt said. The forecast at the start of the season was $5.55/kg.
The fast start to the season had been a feature of the production year so far.
“Sheep and beef prices have stayed strong despite increases in the number of sheep and cattle processed so far this season. This demonstrates that international meat markets have been strong.
“Improved pasture availability and tighter remaining livestock availability will support prices for the remainder of the season.”
For the December quarter, the number of lambs (up 13% on a year earlier), sheep (up 15%), and cattle processed were all up, leaving fewer for the January to September period, compared to 2016-17.
The higher sheep revenues are the major driver of the improved forecast pre-tax farm profits, expected to provide 47% of All Classes Sheep and Beef farm revenues.
Mutton returns are expected to be up 11% to $602 million. A 21% increase in average per tonne values, at $6500, should more than offset a forecast 7.3% fall in mutton export volumes.
Farmgate mutton prices are estimated to be up be up by 37% to average $3.94/kg for the season.
There’s little return from strong wool for the season, with an expected 20% fall in average auction prices. Fine wools are expected to be 25% higher than a year earlier, for an overall 1% fall in wool prices.
New Zealand and Australia together account for about 90% of the international sheepmeat trade (excluding trade within the European Union), and it was the tight supply position in both countries driving the strong export receipts, Burtt said.
For beef, a rise in average export value per tonne, up an expected 3.2% to $7100/kg, will offset a forecast 4.6% decrease in export volumes, because of slightly lower average carcase weights and slightly fewer cattle processed.
Total export production is expected to be 590,000 tonnes.
The average farmgate price for cattle is forecast at $5.29/kg, a nearly 7% lift year-on-year.
The improved export earnings so far have occurred through a mostly strong period for the NZ dollar.
Burtt said the US dollar was expected to strengthen through this year, which should further support returns from the United States and China, the biggest markets for our beef. Increasing Chinese demand was helping absorb the global increase in beef production.
