Lamb prices looking buoyant for remainder of season

Lamb prices looking buoyant for remainder of season

Tight global supplies of lamb - and therefore high lamb prices - look set to continue, which is good news for sheep and beef farmers.

Beef + Lamb New Zealand's (B+LNZ) Economic Service announced today after reviewing the provisional half-year lamb slaughter numbers that total lamb production is on track to reach the forecast figure of 19.3 million head for the current season. This season is 7.7 per cent less than the 2009-10 season and is less than the 19.5 million head forecast in the November 2010 Lamb Crop report. This is the lowest lamb slaughter figure since the 1960-61 season.

Executive Director of the Economic Service, Rob Davison says the announcement helps inform the farmers, processors and the market of the "actual" state of play at this point of the season.

"At this time of year - just over half way through the season - people begin to speculate on where the lamb kill will end up and whether forecasts made at the beginning of the season will hold up. "This season's lamb prices have been strong and all indications are that they will remain so for some time to come, thanks to tight global supplies."

The global supply situation, including lower than usual exports out of Australia have impacted positively on mutton prices which have enjoyed record highs throughout the season to date.

"But, unlike lamb, mutton export volumes are well up. Based on the provisional half-year slaughter numbers, we still expect at least 4 million head of mutton to be processed, which is 9.9 per cent more than last season." Anecdotal comment suggests farmers are culling the bottom end of their flocks to take advantage of higher mutton prices and this could lift the mutton volume a further 5 per cent (0.2 million). In turn this may have an offset with more lambs kept as replacements lowering the export lamb slaughter by a similar number. Lamb prices for April averaged $116 per head and were up 53 per cent on last year's $76 per head for the same month. Similarly mutton prices are up 63 per cent on 12 months ago and for April averaged $97 per head.

These price increases follow from a period of low lamb prices for 3 years from 2005-06 to 2007-08 and depressed farm profitability that helped underwrite the swing to convert prime sheep and beef farmland to dairy production.

Mr Davison says farmers and processors need to note that the production figures are forecasts. "The caveat on this is that dairy conversion rates for the spring of 2011 do not turn out to be higher than previously estimated."

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