Friday, March 29, 2024

Lamb price spike to be brief

Avatar photo
Sheep farmers could get $6/kg or more for a lamb this season – but only briefly.
Reading Time: 2 minutes

The shortage of lambs also meant many farmers would not be able to take full advantage of the short-lived spike, AgriHQ analyst Mel Croad said.

Some overseas markets were prepared to pay up for lambs, knowing there was a NZ shortage and she believed that might push South Island procurement prices to $6/kg and the North Island to $6.10/$6.20 in October and November.

Processors would take a hit to margins to get the stock they needed.

“It looks good on paper but it is procurement-driven and this means it can pull back at any time,” she said.

“What’s important for farmers is the price when the bulk of lambs come on later.”

As lamb numbers built up, the schedule rates could fall to about $5.10 in the South Island and $5.25 in the North Island in January.

After being steady with last year’s kill going into July, low late-winter slaughter rates and a pick-up in prices for some cuts in overseas markets, schedules in the last couple of weeks had picked up to $5.60 to $5.85 in the north and from $5.45 to $5.60 in the South, higher than at the corresponding time last year but still well down on five-year-average levels, Croad said.

The much higher NZ dollar was overriding boosts in in-market prices, she said in her latest Market Outlook.

“It is knocking the stuffing out of what could have been a solid end to the season.”

Processors are struggling for margins and as lamb supply builds up over summer they will pull back on procurement pricing to recover them.

A bright spot is that exporters are selling down inventory levels, which should help the new market season.

The supply season did look set for a slow start, with lamb numbers estimated to be well-down on last year, some early North Island lambs knocked-back by stormy weather, particularly in Central Hawke’s Bay where there were significant losses, and feed issues slowing the finishing rates in some areas.

The United States had been a good market with NZ exports up by 12% and prices also boosted by a consistent lift in consumer demand. Australian exports to the US were up 15% on last year.

Tight domestic supply because of wet weather slowing finishing was keeping lamb prices high in the United Kingdom market but production was expected to rise over the rest of the year, Croad said.

The late season could clash with supply from NZ, which might make it a hard-ask for exporters to secure higher prices for the tight NZ supply levels, which were needed to offset the high dollar.

Already, some exporters were diverting product to other markets prepared to pay.

Total
0
Shares
People are also reading