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NZ lamb, mutton returns at record levels as supplies dwindle

Thursday 15th March 2018

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New Zealand meat processors are having to pay more for lambs as supplies dwindle, pushing lamb and mutton returns for Kiwi farmers to record levels for this time of the year, according to AgriHQ's Monthly Sheep & Beef report for March.

Better rainfall in dry areas of the South Island and lower lamb growth rates in the North Island have led farmers to keep hold of their stock instead of sending them to slaughter, and a higher kill rate earlier in the season also means there is now less stock available than normal, said AgriHQ analyst Reece Brick. That's pushed up the prices processors are offering for both lamb and mutton at a time when overseas markets are strong, underpinning prices as a whole.

In the North Island, processors were last week offering $7.10 per kilogram for lamb, up from $5.35/kg at the same time last year and ahead of the five-year average of $5.07/kg. In the South Island, the price was $6.95/kg, up from $5.30/kg last year and ahead of the five-year average of $5.01/kg.

Meanwhile for mutton, North Island processors were last week offering $4.85/kg, up from $3.30/kg at the same time last year and ahead of the five-year average of $2.95/kg. In the South Island, the price was $4.75/kg, up from $3.30/kg last year and ahead of the five-year average of $2.77/kg.

"A hole in the lamb kill emerged through February and early March based on reasonable or better rainfalls and only moderate lamb growth-rates in certain regions," Brick said. "Steady export returns combined with mediocre supplies underpinned slaughter prices, which have either held stable or lifted marginally each week. Repeated weekly price increases have now pushed both lamb and mutton returns to all-time record levels for this point in the season."

Demand for sheep meat in China had continued following a lull during the country's New Year celebrations, Brick said.

"Any worries about post-Chinese New Year trading was put to bed in the last fortnight," he said. "Activity as a whole was subdued as of late-February since the majority of Chinese customers were still on holiday. However, these buyers reemerged in early-March with the same enthusiasm as just before they went on holiday.

"In-market pricing on key cuts into China are stable, and although the odd importer has shown resistance to current pricing, exporters have generally been able to find other buyers to take any volume they are not willing to commit to. The general sentiment from NZ exporters is positive, and they expect stable or firming prices through the coming weeks."

Sheep meat is popular in China for use in traditional dishes, and traders are buying the meat now to ensure it makes it to China in time for New Year celebrations starting mid-February and to cover demand for the ensuing holiday period. Also known as the 'spring festival', the Chinese New Year fell on Feb. 16 this year with the festival running until March 2, about 15 days in total. As an official public holiday, Chinese people can get seven days' absence from work, from Feb. 15 to 21.

(BusinessDesk)

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