Friday, March 29, 2024

Lamb markets stay strong

Avatar photo
Confidence is pushing South Island lamb prices to levels well above the five-year average for this time of year while seasonal competition in the North Island has bumped prices higher than expected.
Reading Time: 2 minutes

In the south the spot market price has topped at $7.30 a kilogram and in the north a further lift in the market has levelled farmgate prices at $7.30-$7.50/kg.

South Island lambs are making 38% or $2/kg more than the five-year average. On a 19kg carcase that makes an extra $38 a head.

While at this time of the year it is normal for price lifts in line with supply, Canterbury  livestock broker Peter Walsh said both prime and store lambs are trading in much stronger markets than is usual.

The strong market throughout the South Island is largely built on an abundance of feed.

“Farmers are not in a position to have to sell so they are targeting the higher weights and when you are getting $140-$150 for top lambs, buyers are not afraid to pay $100-$110 for store lambs.”

With sheep numbers historically down the limited lamb supply is also helping strengthen the markets.

“Farming is built on confidence and the weather and the exports companies have done a good job in building value into the schedules.

“Farmers can feed the lambs so they can get the ultimate out them and that is giving confidence industry-wide.

The unwavering confidence in lamb returns for the rest of the season has drawn another wave of buyers out of the woodwork.

Some of them are finishers who have their autumn contracts killed and are now looking for replacements.

Large parts of Otago and Southland are very bare on lambs following the midsummer drought destocking with buyers from those regions pulling lambs back down south from Canterbury.

“It’s good for farmers,” Walsh said.

The strong market in the north is predominately driven by seasonal supply competition, AgriHQ analyst Rachel Agnew said.

“Across the country it is different prices but similar trends forcing stronger markets in both the prime and store markets accordingly for this time of year.

“The store markets underpinned by confidence in schedule prices are sending the message to store lamb buyers that there is a dollar to be made given the schedule trends,” Agnew said.

Reports suggest there are still decent numbers of prime lambs around in the South Island, both onfarm and heading to slaughter, but autumn contract prices have begun to leak into the spot market, causing a price spike.

There’s the odd instance of the spot market reaching $7.30/kg but it’s more common for $7.10-$7.20/kg to appear on kill sheets.

This trend is expected to continue in the coming weeks before flattening out. 

In the North Island, despite processors trying to hold prices from lifting too early in the season, it appears the competitive pressure is too great.

Local trade is also weighing in on the game, offering more than export, Agnew said.

“While local trade takes only small volumes they are setting price expectations at the higher level.”

The strong store market, particularly in the sale yards, is also competing with the processing space with the North Island lamb supply expected to be tighter for the rest of the season compared to last year and five-year-average trends.

“The buoyant market reflects the confidence in future schedules and also an awareness that the number of store lambs will only begin to decline in the weeks ahead,” Agnew said. 

The AgriHQ May outlook forecasts a farmgate lamb price of $7.95/kg for October.

Total
0
Shares
People are also reading