Prices for key cuts and in key markets are as high as they’ve ever been but remain reasonable and not at a level that could be a tipping point for consumer resistance.
Market demand has remained very strong and even more supply out of Australia in March, April and May as farmers offloaded stock because of drought was easily absorbed, he said.
Lamb schedule prices continued to lift in June with the North Island slaughter price averaging $7.85kg and the South Island $7.70kg.
They were 4% to 5% increases month-on-month. Volumes and export returns were well up on previous-year levels.
China and the European Union remain the major markets but the United States continues to grow in importance with May sales exceeding $40 million, the first time that has been achieved in a calendar month.
The US is a high-value market now buying more lamb because of its continuing and long-running period of economic growth, Holgate said.
“Consumers have more money in their pockets and that’s good for high-value proteins like lamb.”
China took 40% of NZ’s sheep meat exports in May.
NZ lamb supply will remain tight over the rest of the season that ends on September 30 and procurement competition will put some upward pressure on schedule prices.
If there is a world economic downturn lamb is vulnerable to a price correction because it is the highest-priced meat product.
Australian destocking because of drought is also a factor in the beef markets, Holgate said.
That extra supply means the traditional lift in imported US beef prices that comes with the end of the NZ cow-kill season will be limited.
There was a marginal increase in schedule rates in June and at the start of July the North Island bull price averaged $5.30/kg and the South Island $5.05/kg.
That was a gain over May levels but much of it was caused by a weaker NZ dollar, down by about 3% since the start of June.
It offset weakening US import prices as its domestic beef production increased.
Most of the NZ kill now is prime cattle and it might be another two months or so before NZ is affected by the greater US kill, depending on the make-up of NZ supply at that time, he said.
The higher US supply will limit upward pressure on schedule prices caused by the weaker dollar and expected seasonal decline in the NZ supply.
Holgate noted an increase in the NZ beef herd identified by the Ministry for Primary Industries, to 3.62 million head at June 30, 2017, from 3.53m at the same time in 2016, the first increase since 2006, reflecting increased farmer confidence.
The 2017-18 season kill is also expected to show the first season-on-season increase in three years.
But a further sharp lift in beef cattle numbers is not expected because a change in land use in many areas would be required to achieve it, he said.
