Wednesday, July 6, 2022

Fieldays: Price rebound tempered

Lamb prices will average $95/head for the season and milksolids will be about $6.80/kg ANZ economist Con Williams predicts.

Williams told a seminar audience at the National Fieldays the lamb crop is estimated to be 6-10% down because of fewer breeding ewes and a lower lambing percentage. This means less supply than in the 2011-12 season but globally it won’t mean the prices will be as high as back then. A 17.5kg lamb will be worth $5.40-6/kg or more depending on the size of the lamb crop and procurement behaviour.

The impact of the drought on international milk prices still had to come off. In 2013-14 international prices are predicted to come back 15-20% to average US$3950/ tonne.

Prices might improve next year but Williams warned price volatility had increased and would have to be managed. The price floor for dairy products had increased but volatility had doubled since 2006 to 20%.

The surge in frozen lamb to China and discounting of lamb in Europe had cleared the pipeline. At the end of April, 15% more lambs had been processed in NZ this season, beginning October, compared to a year ago and weights averaged 3% lower.

Over the same period lamb exports were 30% higher implying the pipeline has been emptied.

NZ exporters had to work out how to capture the most revenue from opportunities in Asian markets, especially China. China was still a net importer of most food except horticultural produce.

Fonterra’s cheese price was strong because multi-national chains were expanding hamburger and pizza retail outlets which use a lot of cheese.

He said the ANZ had developed eight indicators to identify the top 10 provinces which were attractive to NZ exporters. Three of them had populations of 58 million each. NZ ag exports are estimated to feed 35-80m people.

Williams said the Christchurch City rebuild would push up farm labour costs. Dairy farm workers will be in shorter supply and labour shortages would impact on dairy conversion costs.

Beef prices are expected to rise about 5%. Beef consumption in the United States has dropped by about 20% since 2007 but Asian markets have grown. In five-10 years China might surpass the USA.

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