Friday, March 29, 2024

Export lamb prices offset fall in volume

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Higher export lamb values have more than offset a fall in volume in the first half of the trading year, with prices continuing to rise.
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The average value per tonne of product rose 14% over the six months to March 31, compared with a near 9% lift in the first three months ended December 31, Beef + Lamb New Zealand data show.

Mutton average values also rose 14% over the period, building on a 5% lift in the first three months.

“What we’re seeing is an increase in value, growing faster as time went on,” B+LNZ chief economist Andrew Burtt said.

Despite the relatively high NZ dollar, the “macro” economic environment was favourable and the outlook for prices still strong, he said.

The strengthening demand from China was diversifying NZ’s markets and putting pressure on other markets to meet global prices.

The total value of lamb exports in the six months to March 31 was $1.33 billion, 11% higher than the $1.2b a year earlier. That was on export volume of 158,200 tonnes, about 2.5% lower than in the same period last year.

The average increase in lamb value of 14% provided an average free-on-board (FOB) value of $8430 a tonne, up from about $7400 a year earlier. FOB is the point, once product is loaded on a ship, that ownership passes from the exporter to the buyer, who takes on subsequent costs.

The big mutton kill over this season was confirmed by the figures, with the total shipped weight during the six months of 61,700t being a record. That was a 26% increase on the previous year.

The mutton value increased 44% to $330 million, with the average FOB value of $5310/t also up 14% year-on-year.

The big volume increase reflected an early processing season, Burtt said. Mutton exports were expected to drop during the second half, so the annual figure would be lower than last year’s total tally of about 90,000t, brought about by the drought-enforced kill.

Some meat companies have said part of the reason for the lower lamb kill and higher mutton throughput was a result of lambs being slower to reach kill-weights in some areas because of weather conditions, so older ewes were sought to keep processing chains busy.

China took 72% of first-half mutton exports, up from 52% at the same time a year earlier. China’s demand for carcases resulted in a doubling of the trade in that form, up to 36% of the total. In line with that growth, the volume of boneless cuts exported nearly halved.

“What we’re seeing is an increase in value, growing faster as time went on.”

Andrew Burtt

Beef + Lamb New Zealand

 

Mutton exports to the second-biggest market, the United Kingdom, declined year-on-year.

The amount of mutton going to China raised the risk of too much reliance on one market, which the companies would be working to balance, Burtt said.

The European Union, including the UK, remains the biggest market region for lamb exports, taking 42% for a value of $675m (FOB).

North Asia took 33%, for a return of $311m.

That market, led by China, is growing as the EU market reduces. However, Europe still has the best prices, with an average $10,200/t (FOB) return, well above North Asia’s average $6000/t.

Beef and veal exports for October to March were virtually steady on a year earlier, at 189,600t.

A decline in volume to North America, North Asia, and EU was balanced by gains in South Asia and the Middle East.

The growth in Indonesian demand, as its import rules were relaxed, was important, making up 4.7% of the total exports, from les than 1% a year earlier, Burtt said.

Total value of beef and veal exports rose slightly, to $1.1b. The average FOB figure was $5880/t, up 0.7%.

The average price for North Asia was $6210/t, compared to $5240/t for North America.

That reflected the product mix, Burtt said. Exports to North America had a higher proportion of ingredient beef for further processing, while exports to North Asia had more market-ready cuts.

The United States remained easily the biggest single market, taking nearly half of exports by value, but China demand was underpinning prices, he said.

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