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NZ farmers paid record seasonal prices for lambs amid tight supplies, AgriHQ says

Wednesday 18th April 2018

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New Zealand farmers are being paid record prices for their lambs for this time of year as supplies tighten, according to AgriHQ's Monthly Sheep & Beef report for April.


In the North Island, processors were last week offering $7.20 per kilogram for lamb, up from $5.75/kg at the same time last year and ahead of the five-year average of $5.16/kg. In the South Island, the price last week was $7.05/kg, up from $5.50/kg last year and ahead of the five-year average of $5.02/kg.


Lamb production was "very low" through late February and early March, with 1.89 million lambs slaughtered in the four weeks to March 17, which was 20 percent below the same period last year, 31 percent behind the five-year average, and lower than any previous year as far back as at least 1990, AgriHQ said. 


March was a very quiet month for New Zealand lamb exports, with just 31,500 tonnes shipped overseas, the lowest for the month since at least 2007 and 22 percent behind the five-year average, AgriHQ said. Farmers sent higher volumes to slaughter earlier in the season and were now holding onto their stock as on-farm conditions improved.


"Lamb and ewes remained high-value commodities both at the farmgate level and on the export market," AgriHQ analyst Reece Brick said in his report. "Throughput did climb from the lows of February as more lambs began reaching target weights, however, this was not enough to have a detrimental impact on prices. On-farm conditions have largely stayed in farmers favour."


In New Zealand's export markets, the UK was feeling the impact of higher lamb prices resulting in lower household consumption of lamb, however continental Europe and the US had proven more tolerant of high market prices.


"Export markets have stayed on a steady plane, however, the chance of upwards movement as supplies tighten is slim given lamb is already much more expensive than other competing proteins," Brick said. "One of the key drivers of this is the strong economic environments in these countries, which has lifted general meat consumption, ensuring inventories have stayed low in key supply periods."


Export returns are set to stay steadier than usual as the season progresses, the report said.


"This is hardly bad news for farmers given slaughter prices are at record levels for this point in the season, and it is perhaps more encouraging that no-one is expecting prices to fall from their current level," Brick said.


Meat is New Zealand’s second-largest commodity export product behind dairy products.



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