Meat & Livestock News

Key Holidays to Shape Sheepmeat Farmers’ Fortunes

The upcoming Chinese New Year and Easter holidays are set to play a pivotal role in determining the success of sheepmeat farmers for the rest of the season. Currently, prime lamb prices stand at about $6/kg, which is up to $1/kg lower than last year. Mel Croad, a senior analyst at AgriHQ, highlights that the outcome of these key retail events will be crucial, with exporters keeping a close watch.

Exporters anticipate a decrease in lamb prices post-Easter, but the extent of this drop hinges on stock clearance during these holidays and the subsequent recovery in consumer confidence and demand.

Willie Wiese, the chief executive of Alliance, notes signs of improvement in the lamb market. However, he suggests it will take some time for this to translate into better farmgate prices.

High inventory clearance in December and optimism for strong demand over the Chinese New Year and Easter fuel this positive outlook. Wiese also acknowledges that current low market prices and reduced Australian lamb supply due to rain are contributing factors to this demand.

A new challenge has emerged for exporters with Houthi rebel attacks on ships navigating the Suez Canal from the Red Sea. This has led to carriers transporting New Zealand freight to take a longer route, adding an extra 12 days of sailing around the Cape of Good Hope.

Croad describes the current lamb prices as steady to slightly lower than pre-Christmas levels. There is hope for a recovery in demand post-Chinese New Year and Easter, driven by growing consumer confidence and prices. However, last year’s post-Chinese New Year demand surge, influenced by China’s emergence from COVID lockdowns, is not expected to be a factor this year.

The industry is in need of a catalyst to break the current cycle and boost the market, especially as prices typically fall during peak production periods. Croad notes that without a significant change, the outlook until June remains unexciting.

In response to low prices, North Island farmers have been retaining lambs longer to increase their weight. The total kill for the first 12 weeks of the season was nearly 190,000 below 2022, marking the lowest start to a North Island processing season in nearly 30 years and significantly below the five-year average.

Conversely, the South Island has seen an increase in lamb processing. For the same period, the kill was 132,000 higher than 2022 and 277,000 more than the five-year average. This could be attributed to South Island farmers selling their lambs early due to fears of dry conditions.

The slow North Island kill and limited Australian lamb supply could become influential later in the season. Exporters have noted a decrease in Australian lamb in the United States market, although this has yet to positively impact prices.