Friday, March 29, 2024

Lamb exports going up

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Export lamb volumes are expected to rise very slightly this season with lower carcase weights offset by an increase in the number of lambs.
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Beef + Lamb New Zealand is forecasting lamb meat receipts for the October to September year to be $2.556 billion, up from an estimated $2.523b in the year just finished, and for total lamb receipts including by-products to be $2.74b, up from $2.7b.

Expected strengthening of major customer currencies was expected to a lead to a slight gain in NZ dollar returns to offset decreases in in-market prices.

They were expected to decline from the buoyant levels of the latest season when they started rising in February, at a time when they usually started to fall and continued higher right through.

The forecasts for returns were based on an average exchange rate of US$0.69 for the kiwi dollar over the year ahead, down from the 0.71 average of the 2016-17 year.

B+LNZ chief economist Andrew Burtt said exchange rate movements had a significant leveraged effect on farmgate prices and he outlined the impact from both higher and lower average rates over the year.

A slightly lower average carcase weight was expected this season, based on a more normal supply pattern, whereas last year had a slower start as plentiful grass availability and improving prices took pressure off farmers to get their lambs away, thus lifting carcase weights.

The slower start was reflected in shipments for the first nine months of the season, through to the end of June, being down 5% on the previous year when forecast dry conditions caused an early supply pattern.

B+LNZ estimated lamb meat export volumes of 296,000 tonnes for the September year just finished and the forecast was for 297,000 tonnes in the year just starting.

For the first nine months of the 2016-17 year, the European Union share of total lamb export receipts fell to 45% from 53% a year earlier, with a big decline in tonnage and a small increase in value per tonne.

Within the EU market, shipments to the United Kingdom were down 21% on a year earlier and the average value per tonne fell 5.3%; the sharp fall in the value of UK sterling after the Brexit vote was behind those figures.

For continental EU, shipment levels also fell but the value per tonne rose slightly.

North Asia made up for those declines and in China, the biggest north Asian market, strong prices resulted in receipts rising 17% despite slightly lower shipments than previously.

A further fall in mutton export volumes was expected because of the fall in the ewe population in recent years.

In the latest year volumes were estimated to be 79,000 tonnes, down just over 5% on a year earlier, but increased market competition for limited supplies with Australian production also much lower meant the FOB value of mutton exports was up an estimated 14% to $5442/tonne.

Mutton receipts were expected to be $410 million for the year, up from $380m the year before.

This year a further 9% fall in volumes to 72,000 tonnes was expected as flock rebuilding took place.

The value per tonne was expected to be higher again but that wouldn’t offset the meat volume reduction and receipts were forecast to be back to $389m. Co-product receipts were expected to about steady at $118m FOB.

North Asia was again the biggest mutton market in 2016-17, Malaysia jumped into second place and the United States was third biggest. Volumes to the EU dropped away because of a decline in shipments to the UK.

Beef and veal meat export volumes were expected to fall slightly against this season following a 3.05% reduction to 409,000 tonnes through 2016-17.

Average in-market prices increased slightly, but the higher NZ dollar lowered total receipts from a year earlier, down 3.15% at $2.80b.

For the current year, volumes are expected to be 405,000 tonnes and receipts forecast at $2.73b. Co-product receipts are expected to rise to $565m from $560m last year.

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