7 More fresh milk exports Vol 16 No 36, September 11, 2017
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Lambs hit $7/kg L
Annette Scott annette.scott@nzx.com
OW global stocks pushing lamb markets above the odds for this season is positive news for the New Zealand sheep industry but farmers are not yet jumping with excitement, Federated Farmers meat and fibre chairman Miles Anderson says. Latest trade statistics revealed average export prices for both chilled and frozen product were tracking well above any prices seen in recent years, including 2011, the last time NZ saw such strong global demand for lamb. Demand for chilled lamb had held solid in recent months, driven by the tight supply with chilled prices reaching historically high levels. The average price for chilled lamb in July, at $14.50/kg, was 20% above last year, 14% above the five-year average and 12% above the peak of 2011. While in that year the high market prices were followed by a rapid market decline, NZ exporters pointed out the difference now was that many global coldstores were empty, which should prevent the sharp downturn seen in 2011. “It’s definitely been a struggle being a sheep farmer this past few years with commodity prices and various climatic conditions around the country so, without a doubt, this is good news,” Anderson said. But he cautioned processors
would need to keep a careful watch. “If we can keep lamb prices around $6/kg, that’s the mark we see as sustainable to keep sheep numbers stable, then farmers will be happy,” he said. “What we don’t want to see is a blowout as in 2011 followed by an immediate crash. “We would hope the meat companies are well aware of jumping too high and then crashing. We are optimistic,” Anderson said.
The desire to secure market share appears to be trumping margin management for this point in the season. Rachel Agnew AgriHQ With the best start to spring in several years, sheep farmers were on a trot to better times with good lamb drops reported across the country despite some issues with over-conditioned ewes from the abundance of grass before lambing. While slow coming, the sun was now shining and the South Island was moving out of the doldrums of winter into what was shaping up to be a kind spring. For those in the middle of lambing, conditions had been very close to ideal and lamb survival was looking good.
“But in saying that, the bulk of the lambing in the South Island hasn’t started yet or is just about to start in the foothills and high country so let’s hope we haven’t spoken too soon,” Anderson said. Meanwhile, procurement competition had stepped up a notch through the upper areas of the South Island. Operating prices (schedule plus premium) in Canterbury and further north were about $6.80/ kg, with some reports of levels closer to $7/kg being paid, AgriHQ analyst Reece Brick said. With good grass covers, finishers were trying to grow out to as near to the chilled Christmas peak as possible forcing processors to throw some money about to draw numbers off farm. Brick said the strength of the store market hadn’t helped with lighter lambs making an obvious premium and farmers opting to sell store rather than sending direct to slaughter. Given there were still four weeks left until the chilled Christmas production period kicked in there was a lot of expectation the $7/ kg mark would be reached in the South Island, Brick said. The North Island lamb market was also experiencing low lamb supply with competition dominating the market and not expected to change in the next couple of weeks. Prices remained in the $7$7.20/kg range with any price variability driven by low supply and processor requirements to fill specific orders. AgriHQ analyst Rachel Agnew said results at the prime sales signalled the extent some
BRIGHTER: Latest lamb prices are, without a doubt, good news for Miles Anderson who has found it a struggle being a sheep farmer in the last few years. Photo: Stu Jackson
processors were willing to go to to secure lamb with returns well over operating price levels. “The desire to secure market share appears to be trumping margin management for this point in the season,” she said.
While there were signs of prices easing in some markets the outlook was positive and it would take a significant market correction to knock lamb prices back to levels seen in the past few years.
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