New season lamb schedule prices are falling earlier and further than many predicted, reaching levels last seen in 2017.
AgriHQ senior analyst Mel Croad says the lamb schedule fell by 10-30c/kg this week, further and a week or two earlier than expected, with some companies now paying $6.50/kg, although some are still closer to $7/kg.
Companies last month forecast prices would be about $6.80/kg by Christmas but AgriHQ is forecasting a schedule price just below $6/kg for late January-February.
Croad said prices reflect market weakness and she is concerned they have been reached before the influx of new season lambs for processing, expected in the North Island in the next two or three weeks.
“This is not driven by volumes of new season lamb but totally by weak markets.
“The bottom line is overseas markets are paying less for our lamb than in the last few years.
“We didn’t see the bounce in export values through August and September so we are starting the downside from a lower position and with competition from product coming out of Australia.”
Until markets recover, Croad cannot see an immediate end to easing prices, evident by the sharp fall in average export lamb values in the past year.
From January to September last year, the average export lamb prices was $13.02/kg. For the same period this year it was $10.93/kg.
Meat Industry Association data shows export returns for red meat for the third quarter of this year were worth $2.1 billion, down 21% from last year, illustrating prolonged market weakness.
Sales in the same quarter to China fell 42% to $642 million. Japan was back 31% to $88m, Taiwan 4% to $75m and Korea 36% to $48m.
Export returns for the year to September 30 were $10.2bn, down 11% on the same period last year.
Returns from most major markets declined over that period, but there were small increases in the United States, up 2% to $2.4bn, and Canada, up 7% to $275m.
Croad said last April there was hope that Chinese demand for sheepmeat would recover and that has not happened, although they are still buying but at low prices.
Instead, global market weakness has been accentuated by record volumes of Australian lamb.
As parts of Australia start drying due to El Niño conditions, Croad said, the country’s current surge of export-quality lamb could be short and sharp.
However, if parts of NZ also start to dry, she said, farmers will have few sale options as store markets are soft, given concerns about the weather and where schedule prices will land.