LAMB MARKET UPDATES | iFarm lamb procurement indicator soars

At the moment, it is 95.5% in the North Island, whereas the same time last year it was 74.8%, which suggests that meat processors margins continue to be squeezed.

The UK leg price is around £1.37/lb which is now 43% below the same time last year and 17% below 5 year average levels. This indicator has been valuable in the past seeing the UK is NZ's largest export lamb market. However, with this market being in the doldrums, there have been limited trades so exporters have been focusing on other markets. Lamb exports to the UK are 4,618 tonnes behind (-9%) last season's levels, however there has been more activity in the Chinese market, which has taken on an extra 10,000t (+32%) of lamb.

The value of lamb exports continues to drop

In June, New Zealand's total merchandise exports were up 6.2% year on year to $4.2 billion according to Statistics NZ. However the value of meat and edible offal was down slightly to $490 million. The challenging overseas lamb market continues to drag the chain with the value of frozen bone-in lamb cuts plummeting $25 million in June, or by 17%.

Frozen lamb continues to be hard to sell seeing importers aren't stocking up but are buying hand to mouth during these tough economic times. On the other hand, chilled lamb is moving more freely. The volume of frozen and chilled lamb exported in June was actually higher despite the total value being lower which further indicates the hard time exporters are facing. China imported 30% more New Zealand lamb in June, but it takes lower valued lamb cuts unlike the UK/EU which is high value lamb market.

On a positive note, the value of frozen exports nearly offset the fall in lamb, as it increased $25 million in value or by 11%. The volume of exported beef was also up by 8%. For the year to June 2012, meat and edible offal has fallen $276 million in value or by 5.1%, which has been driven by the massive $272 million fall in sheep meat over the same period.