Alliance Group and Silver Fern Farms said a strong New Zealand dollar-United Kingdom pound exchange rate would significantly influence lamb returns.
A weak sterling was also pushing UK sheep meat into Europe, which would put pressure on prices in those markets.
SFF chief executive Dean Hamilton said in a newsletter to shareholders that a year ago a NZ dollar bought about 43p. Today it bought 58p.
Translated into prices, Hamilton said a £10 lamb leg in a UK supermarket would have returned NZ$23.25 last year but today that same leg was worth NZ$17.25.
“Given legs make up a large proportion of a carcase and the UK is our key leg market, this is having a significant impact across the board.”
Alliance chief executive David Surveyor told shareholders pressure in the UK was already apparent on frozen sheep meat sales and he expected some weakening in post-Christmas chilled markets.
The North American and Middle East markets were firm on limited volumes and China was also showing signs of recovery though tempered by a high domestic kill.
United States beef prices were under pressure from high domestic production.
Export beef volumes from NZ and Australia were low but the consensus was that the strength of the market was uncertain.
“In the medium term we expect demand for imported beef to improve. However, increasing volumes of domestic beef, increasing volumes of pork and poultry given cheap feed prices combined with commencement of Brazilian imports will continue to create a level of uncertainty in the US market for lean, grinding beef,” Hamilton said.
Brazil had a 64,000 tonne export quota.
Demand from China was expected to increase helped by New Year celebrations being three weeks earlier this year.
The latest Meat and Livestock Australia update showed beef herd numbers had hit a 20-year low of 26.2 million head and processing numbers were down 26% on the same time last year.
Surveyor described a recent “mild recovery” in the US manufacturing beef market as positive but it was too early to judge if it was sustainable.
“The main issues appear to be sufficient supply from US domestic production, very heavy autumn cow kills and feedlot restocking activity based on a record corn harvest and lower feed costs,” he said
It was the height of the venison season and low deer numbers had helped boost European prices.
Hamilton said market promotion and new supply contracts had paid dividends with retailers being proactive and launching activities to grow sales, which should strengthen demand for frozen venison from December to February.
