Thursday, 21 January 2021 12:25

Dollar causes fall in lamb prices

Written by  Peter Burke
A report from ANZ suggests overall demand for sheepmeat is subdued. A report from ANZ suggests overall demand for sheepmeat is subdued.

A report by the ANZ bank paints a somewhat sombre picture for sheepmeat in the coming year and mirrors a similar prediction in MPI’s Situation and Outlook for Primary Industries report (SOPI) published in December.

 

ANZ says, overall, global demand for lamb products is relatively subdued and as a result farmgate prices for lamb and beef are expected to soften further as the country heads into the peak processing months.

It says while international prices for NZ lamb and beef seem to have stabilised after a fall, the strong NZ dollar is taking the edge off farmgate prices. Lambs destined for slaughter in the North Island are fetching $6.50/kg CW and $6.40/kg CW in the South Island, but the report expects these to fall to around $6.00/kg CW by February.

It notes that with plenty of feed around, farmers have been holding onto stock. But Rural News is aware that in some parts of the country the quality of feed has been so poor due to the rains in November and December that farmers have been unable to get their stock up to saleable weights.

Processing of lamb at the works is nearing capacity, but the report notes that some processing plants are struggling to operate at full capacity due a shortage of workers.

ANZ says fewer lambs are going on the store market as farmers rebuild their flocks, which they had to reduce in last season’s drought.

On the international front, the bank’s ag economists say the price of lamb legs being sold in the UK has firmed slightly as a result of the Brexit deal, which they say has removed some of the uncertainty that existed in that market. The report also points out that with other markets, such as China opening up to NZ lamb, dependence on the UK market has reduced.

In terms of beef returns, it seems that the rising strength of the NZ dollar is a major factor. ANZ says while a strong dollar signifies a strong overall economy, this is of little consolation to beef farmers. It says the current schedule prices for bull beef are between 6-11% lower than normal for this time of the season. Prices are tracking at just above the $4.50/kg CW – the lowest they have been since 2015.

In terms of the NZ dollar, ANZ predicts that it could go higher by the end of the year – reaching US$.74 – and adds that this is partly due to global trends pushing down the $US. There is also a warning related to Covid 19, which states that disruption to shipping schedules and lack of cool store capacity could cause processing delays later in the season.

More like this

Outlook mostly positive - banks

Rabobank and the ANZ Bank agree that the outlook for dairy and meat for the coming year is positive, but both also have some words of warning.

Good and bad news!

Prices for NZ's main primary exports could rise to new heights in the coming year, but beneath that is a layer of not so good news.

National

Machinery & Products

New disc cultivator launched

Väderstad has introduced a new disc cultivator – the Carrier XT 425-625 – featuring rotating disc axles, that optimizes results…

JD unlocks its digital system

As a long-term advocate of digital technology, John Deere has taken the route of mass data capture, rather than concentrating…

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Fruitful change?

OPINION: Your canine crusader notes that meat company Silver Fern Farms has undergone quite a refresh over the last few…

All for show?

OPINION: The Hound notes that Fonterra is cashing in on the curent government's largesse with taxpayer money.

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter