The continued easing of export sheepmeat prices has led at least one meat company to publicly revise down its early season forecasts.
Silver Fern Farms (SFF) this week advised suppliers it has significantly revised its forecast lamb prices through until January to $5.80-$6.60/kg (plus programme premiums) and mutton to $2.50-$3/kg.
On September 1 its forecast lamb prices through to December were $6.90-$7.30/kg (plus premiums) and mutton $3-$3.80/kg.
Alliance last month forecast lamb prices through to December of $6.80-$7.50/kg (including premiums) and mutton $3-$3.50/kg.
Alliance chief executive Willie Wiese said sheepmeat inventory in China has reached 1 million tonnes, double the normal volume for this time of year.
SFF chief executive Simon Limmer has just returned from China, where he attended the China International Importers Expo (CIIE) and said in a supplier’s newsletter that the Chinese market, along others around the world, remains challenging.
“China is one of our key markets and our customers are feeling the pressure of reduced consumer spending and the availability of large volumes of cheaper protein from other markets,” he said.
SFF notes in market commentary that lower lamb prices are generating demand in Europe and the Mediterranean but the United States is under pressure from large volumes of Australian lamb.
Prices in the US have held reasonably steady with a glimmer of good news that French racks are holding their price as hospitality and retail prefer New Zealand product because it is slightly smaller and more appealing for plate costs.
Australian lamb has “decimated” the United Kingdom wholesale market but retail continues to perform where NZ lamb is favoured due to its size.
Middle Eastern lamb markets are under pressure as suppliers look for alternatives to China.
Competition from Australian mutton along with China’s own domestic supply is impacting demand, especially for heavier grade carcases.
“It’s a difficult sell outside of China anyway, and now with China pushing back it’s only getting harder,” the company said.
Wiese told shareholders in a newsletter that while some sheepmeat inventory was cleared during a recent seven-day Chinese national holiday, it was quickly replenished and now exceeds 1 million tonnes, more than twice what is normally in market at this time of year.
Two senior sales staff have gone to China to meet with key customers and to seek alternative sales opportunities.
“We are re-directing as much product away from China as we can to other markets,” Wiese said.
Markets continue to be inundated with significantly increased volumes out of Australia, which are keeping prices low.
In Focus podcast: Willie Wiese, Alliance chief executive, joins Bryan to discuss the turmoil in global markets that has seen the co-op go from a record profit last year to predicting a loss this season (listen from the 1:20 minute mark).