Meat exporters in New Zealand are witnessing tentative signs of recovery in crucial markets, although these are not substantial enough to prevent Alliance Group from reducing its forecast lamb and sheep meat prices through mid-February.
Both Alliance and Silver Fern Farms have observed indications that prices in key European and Chinese markets may have reached their lowest point.
Alliance Group’s chief executive, Willie Wiese, informed suppliers that the latest price forecasts are a reflection of the current market status.
The revised forecast for lamb, excluding programme premiums, is set at $5.70-$6.20/kg, and for mutton at $2-$2.30/kg, with a potential uptick in the Chinese market. This is a decrease from October’s forecast, which was $6.80-$7.30/kg for lamb and $3 to $3.30/kg for sheep. Prime cattle prices have also been marginally adjusted from the October forecasts.
Wiese noted early signs of market improvement, both in price and inventory clearance, but emphasised that the full extent would become more apparent during the festive season and the Chinese New Year.
He mentioned that high inventory levels of red meat proteins, especially from Australia, are currently suppressing demand for fresh products. Wiese also highlighted that consumer spending continues to be cautious, with fewer people dining out and opting for smaller portions when they do.
Retail prices have remained unexpectedly high, which Wiese attributes to retailers’ efforts to clear inventory while trying to maintain the value of their stock. Additionally, a strengthening exchange rate is presenting a new challenge for exporters, with the New Zealand dollar gaining strength against the US dollar.
Simon Limmer, chief executive of Silver Fern Farms, shared insights with suppliers, noting that prices for primal lamb cuts in China appear to be stabilising, though prices for secondary items are still declining.
He raised the question of whether this stabilisation marks the market reaching its lowest point or is merely a temporary respite. Limmer also pointed to recent rainfall in Australia and the consequent rise in livestock prices as a possible factor in this stability.
In Europe, Limmer observed some positive developments, with pricing reaching a level that has encouraged retailers to promote lamb again.
He noted that retailers have been slow to pass on savings to consumers, preferring to maintain high margins. However, he anticipates that once one retailer starts promoting lamb more aggressively, others will likely follow, potentially boosting demand.
Looking ahead to Easter next year, there is optimism that the market could be favourable, given retailers’ willingness to promote products at attractive prices.
Meanwhile, the mutton market appears to have stabilised, with prices holding steady but with limited demand for heavier animals.
This cautious optimism in the meat markets reflects the complex interplay of global market dynamics, consumer behaviour, and environmental factors, all of which are crucial in shaping the future of meat exports from New Zealand.
