Friday, April 12, 2024

Scant hopes of late-season lamb rally

Neal Wallace
As demand and price rise in US, Australia muscles back into the market.
Reading Time: 2 minutes

There appears little likelihood of a late-season rally in lamb prices, judging by the latest forecasts from exporters.

Silver Fern Farms is forecasting farmgate prices for lamb through to May of $5.70 to $6/kg, which is little different to January forecasts of $5.70-$6.10.

Demand and prices are strengthening in the United States but SFF chief executive Dan Boulton warned of renewed competition from Australia.

“Overall we have seen less product from Australia but that’s going to change, with expectations that product will start to flow freely from this market,” he said in his latest market update to suppliers.

“Australian sheepmeat exports have been up 3% year on year, representing a significant additional volume, and 2023 had already been a big year for them.”

Murray Behrent, Alliance Group’s livestock manager, said the co-operative has released minimum-price lamb contracts of $6-$6.20/kg applicable from late April to the end of May.

He said this gives farmers certainty as the kill ramps up.

Behrent said demand for lamb remains strong in all our main markets, but the prices they are prepared to pay are less than optimal.

“The whole world is looking for protein but at subdued pricing.”

Behrent believes lamb prices will gradually improve over the next six to seven months as economies recover, but a return to the heights of previous years could be some time coming.

Meat and Livestock Australia (MLA) said lamb prices started the 2024 season strongly at AUS786c/kg, marginally higher than at the same period for 2023, but in the past 10 weeks these have fallen 20% compared to last year.

An influx of winter-born lambs will start to flow shortly and the MLA notes sheep numbers through saleyards are 13% higher than at the same time last year.

SFF’s prime and bull beef forecasts have increased slightly on the back of higher prices and lower production in the US, with Boulton saying the weekly beef kill has fallen below 600,000 a week.

The Chinese market remains flat for beef due to ongoing economic uncertainty and excess supplies of protein.

SFF’s updated price forecasts through to May are mutton $2.30-$2.65 (January forecast $2.10-$2.40), Prime beef $5-10-$5.80 ($5-$5.60), and bull $5.20-$5.80 ($5.10-$5.50). Cow is unchanged at $3.50-$3.90 but venison is back slightly at $8.65-$8.75 ($8.70-$8.75).

Alliance forecasts through to May for prime and bull beef are $5.20-$5.70/kg and cow $3.30-$3.60, with Behrent saying much of that is driven by the US shortage.

AgriHQ senior analyst Mel Croad said current sheepmeat and beef pricing is consistent with those forecasts.

Unlike last year, when exporters were waiting and hoping for China to fire, Croad said the state of that market has been built into forecasts.

She does not see much upside in the short term for sheepmeat pricing but notes that the smallest US cow herd in 70 years is underpinning optimism that beef prices could remain buoyant through until spring at least.

Two years of drought have forced the liquidation of the US cow herd and it is now entering the rebuilding phase.

Croad’s only reservation is that US domestic beef prices could be rising too rapidly, increasing in recent weeks by US50c/lb compared to the usual US8-10c/lb.

“There needs to be a little bit of caution that the market doesn’t overheat, forcing prices back down again.”

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