NZ lamb prices picked to rise 10% next season on lower supply, Chinese demand: ASB
Lamb prices averaged just above $5 per kilogram between October and mid-May.
Hot Topic
Aus election
New Zealand lamb prices, trading at a three-year low, may rise 10 percent next season, on lower supply and increased demand from China, ASB Bank says.
Lamb prices averaged just above $5 per kilogram between October and mid-May, the lowest level since the drought-affected 2012/13 season, as early lamb processing saw a large percentage of the meat sold into a weakening frozen export market, and as China and the UK processed more of their own flocks. ASB Bank expects prices to lift at least 50c a kilogram next season starting in October.
The first signs of a lift in lamb prices may have emerged, with prices spiking 4.5 percent in New Zealand dollar terms over a week, drawing level with the same time a year earlier, according to ASB's latest New Zealand Commodity Price Indices. An agreement with China to allow future trade in higher-value New Zealand chilled meat exports, a slowdown in China's pace of slaughtering its own flock, and reduced supplies in New Zealand and Australia due to a lower sheep flock are all boosting sentiment, ASB says.
"I think that the combination should help lamb prices eclipse last season quite comfortably," ASB rural economist Nathan Penny said. "It's potentially good news for sheep farmers and their cashflows over the season ahead. It gives them a little bit more confidence to make decisions on the basis of prices lifting higher than this season. The sector, in general, is a little bit downbeat on the basis of dairy struggles so it's one counter to that low level of confidence."
New Zealand export lamb production is expected to fall 7.8 percent to 19.6 million head in the season ending September 30, 2016, according to the mid-season update published by Beef + Lamb New Zealand Economic Service in March.
(BusinessDesk)
Tina Morrison
Tue, 24 May 2016
Tue, 24 May 2016
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
NZ lamb prices picked to rise 10% next season on lower supply, Chinese demand: ASB
58432