Saturday, March 30, 2024

‘It’s great for farmers’

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Strong market demand and delays in stock going for processing have pushed lamb values to record levels for this time of year.
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Indications are that schedule prices now are even slightly higher than levels the meat companies were paying just a couple of months ago for lamb for the important Easter chilled markets in the United Kingdom and Europe.

The lamb schedules in the North Island, where they are traditionally slightly higher, and the South Island are a good 40% higher than the five-year average and 30% higher than last year.

That means schedules in the $7/kg to $7.20/kg range, up from the five-year average just above the $5/kg mark and the $5.30 to $5.35 level last year, AgriHQ analyst Reece Brick said.

“It’s just been great for farmers but the companies would like prices to be a bit lower.”

Firms are being shielded by in-market prices remaining high, benefiting from the strong world economy.

And that counts for mutton as well, where Chinese demand has come back quickly and strongly from the New Year holiday.

Where there has been some price resistance from a buyer, other buyers have been found easily.

The story is the same in the UK lamb market, which is slower than the others, but product has been easily placed in the United States and Europe, Brick said.

The mixed summer climate conditions explain the shortage of lamb through part of February and into March, after a busy January processing period.

“There was a hole in the lamb kill and repeated weekly price increases since then.”

The widespread pre-Christmas drought meant many more lambs being processed then, leaving fewer for the usual January to March peak period.

There’s been plenty of rain in the North Island since New Year but lambs in some areas have been slow to put on weight.

AgriHQ believes some finishers are now in a position where they can send more lambs away, in what will still be an elevated market.

The season’s timing has played to farmers’ advantage, Brick said.

The big pre-Christmas kill, especially for mutton, was snapped up by China then the Easter chilled and Chinese New Year orders stepped up and then, when prices were expected to peak, the supply shortage pushed them higher.

Market talk had been that the lamb schedule would stay above last year’s levels through the peak kill period, perhaps falling to the $6.50/kg level but they just kept improving.

Brick said the risk is that lamb in-market prices are at levels too much higher than for other meat proteins, possibly leading to buyer resistance but the strong world economy is countering this for the time being.

That explains the sustained high demand for premium product such as middle cuts.

French racks into the US and European markets are priced 40% above the five-year average.

Mutton schedules are still around $4.70/kg to $4.85 in the South Island and $4.80 to $5 in the North, Brick said.

That compares to five-year averages of $2.77 (SI) and $2.95 (NI) and last year’s levels around $3.30/kg.

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