NZ lamb prices hold firm in January

Despite typically declining in the first few weeks of the New Year due to increased seasonal production, New Zealand (NZ) lamb prices in January 2017 have remained relatively steady so far – underpinned by strong domestic and international demand (AgriHQ).

While NZ lamb (17.5kg cwt) prices trended 10¢/kg dearer year-on-year throughout the Christmas period last year, at close to NZ$5.20/kg, and keeping in mind the drier conditions that were recorded throughout many major producing regions during the same time in 2015, NZ farm gate prices for slaughter types remained well below the five-year average value (NZ$5.80/kg).

This week, AgriHQ report that the NZ lamb (17.5kg cwt) indicator sits currently at just over $5/kg, and with inventories expected to remain lower year-on-year for the season-to-date over the coming weeks, AgriHQ expect lamb farm gate prices to hold around this level in the lead up to the busy Easter trading period.

Reassuring average prices somewhat so far this year has been strong import demand from China and parts of the Middle East in particular, while shipments to the US and EU have also contributed to stronger trade conditions of late. However, AgriHQ report that uncertainty around future US demand, an unfavourable exchange rate with the UK, and a seasonal lift in Australian lamb production are all expected to impact demand for NZ lamb over the coming weeks.

Looking forward, and highlighted in Beef + Lamb NZ new season outlook, lamb production is forecast to decrease (1.6%) to 357,700 tonnes cwt for the 2016-17 season – as a result of fewer processed lambs and a rebuilding flock – while export lamb prices (assuming an average exchange rate of US$0.67) for the same period are expected to average NZ$4.85/kg.