Friday, March 29, 2024

Where are all the lambs?

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The next two weeks might confirm the lamb kill season as one of the smallest on record.
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Latest figures won’t be released for several weeks but at the last available count, week 46 ending August 17, there was a season tally of 17.4 million, an estimated shortfall of 1.2m on the corresponding time last year.

North Island flows picked up slightly from a slow start but indications are nationwide numbers didn’t pick up enough for a significant catch-up by the September 30 season-end, AgriHQ analyst Mel Croad said.

AgriHQ indicator prices are at a record and some contract prices might be at better premiums.

The indicator price last week was $8.60kg in the North Island and $8.35kg in the South Island.  

The corresponding week last year turned out to be the season peak at $8.55 and $8.30 respectively then prices fell quite sharply by  5c/kg to 10c/kg a week.

With the higher prices driven by China and a more favourable dollar rate there is potential for prices to keep rising this year though the window might be short, Croad said. 

Chinese demand for lamb flaps, in particular, has pushed their values up to $11.70-$12.10/kg, more than some frozen legs are selling for in Britain and Europe.

Leading up to this time last year processors got carried away with their procurement, paying about 80% of export value, whereas this year they’ve been more realistic at about 70-72%.

There are a couple of notable issues around supply prospects over the next few weeks.

Firstly, the mild North Island winter has brought some lambs on more quickly, leading to the risk of them cutting their teeth earlier to become two-tooths rather than lambs. That means a $2/kg or more cut in value, a decent margin hit for farmers who were paying $130 a head plus for store lambs, Croad said. 

Those high store lamb prices are the other factor around the country, with farmers needing to maximise value, leading them to keep lambs on the ground longer to build their weight.

Last year, the lamb kill of about100,000 a week jumped to 150,000-185,000 in the last two weeks of September. There’s not much sign of that yet this year.

Beef + Lamb estimates of lower lamb numbers coming through could also be subject to some unknowns around lamb losses in the devastating rainstorms through the eastern North Island about this time last year. The losses might have been underestimated, which is why this year’s processing numbers seem much lower in comparison, Croad said.

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