Saturday, March 30, 2024

Good times are here

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It’s been a long time coming but sheep farming is where it should be, Federated Farmers meat and fibre chairman Miles Anderson says.
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With winter schedules knocking on the door of $8, global markets largely continuing to track along at the solid pace of recent months and global inventories remaining low it’s a good time to be a sheep farmer, he said.

Confidence at the farmgate in sheep is strongest since 2011.

But Anderson cautions the last time prices reached these heights they weren’t sustainable.

“The arse fell out of the market and it’s taken seven years to return to here,” he said.

“We don’t want a repeat of that when lamb priced itself off many menus and ultimately damaged demand. 

“I just hope as a country we are not gouging prices and putting people off buying our lamb again.

“We want to see these prices but we need them to be sustainable. If they are, then sheep farming will be looking to good ongoing positivity.”

Anderson said New Zealand flock numbers are at a critical mass for the sheep industry so good positive indicators will hopefully stall sheep farm conversions to other livestock.

“If ewe numbers drop dramatically we will find ourselves going through another whole restructure of the industry and we have had enough of that.”

While meat companies are confident short-term, the cloud on the horizon is the ramifications of tariff wars and globally related trade if Europe, America and China enter into major tariff and protection like policies,” Anderson said.

AgriHQ analysts forecast positive prospects for the next three or so months.

Contracts this week are peaking at $8/kg from at least one North Island processor for lambs over a two-week July period.

Contracts in the South Island top at $7.90 with the spot market at $7.80-$7.90 in the north and the south trailing about 10c behind.

“The spot market is very strong and we expect will continue to follow closely to the contracts,” Rachel Agnew said.

She said uptake of contracts is slow because of the high spot market pricing.

“That’s typical in a good season.”

Processor are reporting stability in the pricing with good market demand and global inventories remaining low.

Mutton is flying high too with slaughter numbers in the South Island 60% or 34,000 head above a year ago, an indication farmers are optimising the current good returns for sheep.

The overall mutton kill is 19%, 298,000 head above last season.     

While there is some weakness in the UK frozen leg market, the bulk of NZ production is already sold posing less of a problem than it would have otherwise been in peak production season. 

China again has been the superstar of the markets.  

In May this market took 43% of NZ’s total lamb production with the average export price for the month up by 6% on April and up by 20%, the equivalent of $1/kg, on May last year.   

Reports from exporters suggest there will be further upside for prices in this market as NZ supply declines in the coming months. 

High export volumes of sheepmeat from Australia have not adversely impacted demand for NZ lamb to date.  

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