A shortage of lamb has prompted multiple meat companies to offer contracts over winter and spring of between $8-$9.10/kg, while beef exporters are watching with interest fall out from a month-long beef export ban imposed by the Argentine Government.
Facing elections and soaring domestic beef prices, the Government this week imposed a ban on the export of beef in a bid to force down prices.
Reuters reports that farmers have responded by stopping the trading of livestock for nine days, putting them on a collision course with the Government.
Officials say the ban will be lifted once local supplies are assured at reasonable prices.
AgriHQ senior analyst Mel Croad says global repercussions from this sudden development are largely unknown.
While it’s not the first time Argentina has made this move, it is since being such a dominant exporter to China.
In recent years 75% of Argentinian beef has been sold to China, peaking at 400,000 tonnes a year for each over the past two years.
Croad says exporters are closely watching developments, but the initial consensus is that removing 30,000-40,000t of exported beef a month from the international market will push up prices.
“With China the main market and Argentinian beef now not available, they will be looking elsewhere. Other markets will be looking for short-term upside from China,” Croad said.
Export volumes out of Uruguay, Brazil, New Zealand, Australia and the US to China were all lower last month than a month earlier.
With meat en route to China, Croad expects it to be several weeks before any impact from Argentina’s export ban to materialise.
A domestic and global shortage of lamb is impacting on the NZ suppliers, with contracted prices rising sharper and earlier than usual.
Croad says contracts being offered range from mid-$7 to $8/kg for supply in July to a peak of $9.10/kg in August in the North Island, and peaking a month later in the South Island.
“Based on the expected lamb slaughter, these contracts show meat companies are scrambling to secure supply,” she said.
A global shortage of lamb is being driven in part by the reopening of foodservice outlets.
Croad says pricing at these levels was last seen in 2019 when a company offered $9/kg for August supply. This year she is aware of at least four companies offering contract prices of more than $8, which is more than usual.
“A few weeks ago the spot market was nowhere near $7, now we have contracts for July to September supply of $8 to above $9 in both islands,” she said.
Last week Croad warned there could be 1.1m fewer lambs left to slaughter this season compared to last year, creating competition from processors.
