Prolonged dry weather will have mixed effects on commodity prices, says ASB senior rural economist Nathan Penny.
In his weekly commodities report, Penny noted that the last 18 months or so have been stellar for lamb prices.
But lamb prices, so far over 2019, are hinting that they are running out of steam, he says.
Lamb prices opened 2019 at $7.20/kg, some 45c/kg lower than where they ended 2018. From the peak price of $8.43/kg back in September, the per kg price has now fallen $1.23/kg (or around 15%).
“This fall is a little more than we expected at this stage,” says Penny.
“The average fall over the past five years from the spring peak to autumn low is around $1.20kg. In other words, the fall to date has already exceeded the average fall with another two or so months before prices usually bottom out.
“Still at $7.20/kg, lamb prices remain healthy. Nonetheless, the steepness of the recent fall warrants a wary eye on lamb prices over the next month or two. In particular, we will be monitoring closely how Chinese lamb demand develops given the broader slowing in the Chinese economy.”