The upper range of new season lamb price forecasts announced by Silver Fern Farms suggests some market confidence, an AgriHQ analyst says.
Silver Fern Farms is forecasting a farm gate price range for lamb from now until December of $6.90 to $7.30/kg, but AgriHQ senior analyst Mel Croad said the top end of that forecast suggests a lift in prices from current levels.
This week’s AgriHQ prime lamb indicator price is $6.95/kg in the North Island and $6.90/kg in the South Island.
Croad said prices normally peak through September/October then ease through to December as more lambs become available, but the upper range of those indicative prices suggests some potential market upside.
SFF is the only meat company so far to publicly release its forecast, which confirms earlier warnings of a significant drop in sheepmeat prices from last year.
Its forecast for mutton through to December is $3-$3.80/kg, prime beef $5.30-$6.30/kg, bull $5.20-$6.20/kg and cow $3.60-$4.30.
Chilled venison prices are forecast at $9.75-$10.30/kg and frozen $8.70-$9.20/kg.
Additional programme premium payments will be made where applicable.
SFF chief executive Simon Limmer told suppliers in a newsletter about challenges across all markets from low demand, high inventories and increased production out of Australia and Brazil in particular.
“We’re cautiously optimistic prices have bottomed out for beef, but things are still very challenging for lamb,” he said.
“Our forecast pricing reflects where the markets are at right now, however we are suffering somewhat of a perfect storm and we are experiencing quite a correction.”
Limmer remains optimistic that underlying demand for red meat protein will continue to grow but said the recovery, especially for lamb, is dependent on China.
Meat companies have noticed small improvements in demand for lamb from China, but the SFF forecast is substantially below last season’s industry average opening price of $8.74/kg, which reflects current weak international demand and prices and Australian lamb flooding markets.
Croad has major concerns about mutton. At 132,000t, Australia has shipped over 50% more mutton in the year to August. Forty-four percent or 58,000t has gone to China, NZ’s main mutton export market.
A year ago the Australian mutton price was $AUS5.20/kg ($5.64) but this week it had collapsed to $AUS1.88/kg ($2.04).
Forecast prices could be optimistic, Croad said.
“To get $3.80/kg at some point between now and December could be a tough ask.”
Croad said low sheepmeat farmgate prices in Australia mean exporters are selling at prices lower than NZ, which undercuts our markets.
She said forecast beef prices appear accurate but notes there has been some procurement pricing in recent weeks as the flow of stock has slowed due to low grass growth, especially in the North Island.
SFF livestock manager Jarrod Stewart said in a podcast that while these prices reflect current markets and trends, there is still plenty of uncertainty, especially with lamb.
There are “small signs of life” for lamb in China, but he described the general outlook as “gloomy”.
He agreed beef markets appear to have bottomed out, saying improvement is expected from the United States later this year.
Venison is performing well in terms of volume and prices for chilled, but there is some uncertainty with frozen.
Stewart said labour issues, which have plagued the industry in the past few seasons, should not be such a factor in the coming season.