Prices have also corrected in line with volume with lower numbers of lambs in the North Island holding schedules up to $7.10/kg but in the South where there’s good numbers still coming forward pricing is down to $6.60-$6.70/kg.
This time last year the South Island was at $7.05 and the North Island at $7.20.
The price differential between North and South aligns with processing volumes and lamb supply.
The South Island had very big lamb kills in February and the first week of March, processing 350,000 head a week compared to 250,000 a week for the same period last year.
“These volumes are driven as much by the weather than anything else with late summer, early autumn weather conditions more favourable last year and the dry period February-March this year moving a lot of lambs.”
The North Island also had bigger kills in February and March with lighter lamb supply now contributing to the price holding up.
“In the South Island there’s still reasonable lamb flow and that’s comparably reflecting in price.”
The onslaught of lambs to the processors topped 700,000 a week for February and early March, the highest seen for many years.
“There were some big tallies not seen for a long time at that time of year that put real pressure on processing capacity and why the gap is emerging now,” Croad said.
But despite the supply bubble the markets remain solid and exports are up.
“We are not used to supply like that at that time and we don’t expect to see that again now for the rest of the season.”
More likely the challenge will be managing the tighter supply over the winter months.
“With store lamb prices holding up and the forecast of 800,000 fewer lambs this year it’s looking to be thin processing over the winter as farmers hold on to lambs for better weights to balance what they’re paying for store lambs.”
Store lambs have been trading at $3.50/kg in the North Island and when looking at the farmgate price of $7.10/kg it shows store values are trading at 49% of schedule.
That has climbed from 44% a month ago and compares with 45% this time last year.
“Historically, store lambs trade at 47% of schedule through April, which would suggest the store price should be more like $3.35/kg on historical levels, therefore current buyers are paying a premium for store lambs compared to five-year averages and the market this time last year.”
In the South Island the store lamb market is less heated.
At 3.25/kg for a 32kg lamb, at a farmgate price of $6.70/kg, it shows that current store values are trading at 48% of schedule.
