The company was offering a guaranteed minimum of $5.30/kg for supply between mid-March and the end of April.
Meat companies typically took several cents, often up to 20c/kg, off the price once the Easter trade was filled but the shortage of lambs in the North Island made that unlikely this year.
Affco was achieving better returns out of China and the Middle East as well as getting new revenue streams from new technology, extending product shelf-life and value-add products, the group’s national livestock manager Tom Young said.
“They’re certainly better than last year and we think a lot of China and mid east buyers are aware New Zealand is short of lamb and mutton supply, so are prepared to pay more.
“We’re also trying to provide farmers with certainty for their budgets so there’s a guaranteed minimum plus the prospect of an upside for them if we can achieve better pricing.”
The new offer showed Affco was again slightly ahead of the game after leading the market with Easter contract offers, Agri-HQ analyst Rachel Agnew said.
“They were offering up to $5.30/kg for Easter when the rest of the market was in the $5.15 to $5.25 range.”
That set a benchmark and it would be interesting to see the response.
“Usually companies try to take money out of the schedule at this time of year but this season is different as the production is just not there,” Agnew said.
She thought other companies might still reduce their printed schedules but keep some spot premiums in place to hold the market at current levels or likely even higher.
The North Island was short of lambs and slaughter rates were falling. With recent heavy rain along the North Island’s east coast farmers would now be holding on to lambs to build up their weights.
“It is a card up their sleeve for farmers. Processors will be short of stock so it might be a case of show us the money.”
Young said the industry was awaiting Beef + Lamb NZ’s progress report on stock levels, due out early in March.
There was a view the North Island might have between 500,000 and 600,000 fewer lambs for processing this season than last season.’
Between 100,000 and 200,000 lambs were thought to have gone to the South Island during the worst of the Hawke’s Bay drought, before the rain of the last two weeks.
The Affco autumn contract was well up on last year’s $4.85/kg to $5/kg level, Young said.
The company was getting bookings from farmers for the latest autumn offer, which closed next Friday, March 3, he said.
