Monday, February 26, 2024

Tentative upside to meat markets

Neal Wallace
Alliance nonetheless goes ahead with cuts to its forecast through to mid-February.
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Meat exporters see tentative signs of improvement in key markets – but not enough to prevent Alliance Group from lowering by over $1/kg its forecast lamb and sheep meat prices through to mid-February.

The new forecast comes as exporters and commentators ask if global lamb markets have reached or are close to reaching the bottom, citing signs of stability in key markets.

Previously they were fearful of how much further prices would fall.

AgriHQ senior analyst Mel Croad said New Zealand farmgate prices will continue to ease as seasonal production increases, but the fall may not be as sharp as previously feared.

“We have seen a small improvement in key markets where prices aren’t falling as much as appeared a month ago,” she said.

A key pending indicator will be the level of activity around Chinese New Year on February 10, with hopes there will be lower in-market stocks.

Both Alliance and Silver Fern Farms note improved pricing signals from markets in Europe and China.

In an advisory to suppliers, Alliance chief executive Willie Wiese said its latest price forecast reflects where markets are now.

It is forecasting lamb prices, minus programme premiums, of $5.70-$6.20/kg and mutton $2-$2.30/kg, about $1/kg below those made in October.

Forecast prime cattle prices are marginally below that earlier forecast.

Retail prices have remained higher than anticipated, which Wiese attributes to retailers clearing inventory while minimising the impact on the value of retained stock.

A new factor facing exporters is the exchange rate, which in the past month has increased NZ3c against the US dollar.

Silver Fern Farms chief executive Simon Limmer told suppliers prices for primal lamb cuts appear to be stabilising in China though secondary items continue to decline.

“This raises the question of whether the bottom of this market been found, or if is this a temporary reprieve?”

Similarly, Limmer said there are some “green shoots” in Europe, where pricing has reached a level at which retailers are keen to promote lamb again.

Croad noted that the North Island lamb kill has been slower than usual due to grass growth and low prices.

In addition to prices in China stabilising, she said there are reports that early

conversations regarding chilled prices for Easter are at levels similar to or

below what was achieved for Christmas.

“No one is getting too carried away.”

A Beef + Lamb NZ Insights analysis of Australian sheepmeat exports warns it will remain a serious competitor into next year.

In the 11 months of this year the number of Australian lambs and sheep processed was 7% higher than the previous year.

This has helped push average NZ mutton prices 45% below the five-year average and lamb 15% below.

Increased Australian supply coincides with an expected NZ lamb crop of 20.9 million, 2.6% above last year due to a high lamb drop and survival rates after favourable weather during mating, winter and lambing.

The report notes speculation that the Chinese economy could rebound in the first quarter of next year but says it is still plagued by high meat inventories.

Australian mutton exports to China in October were 57% higher at 10,100 tonnes. In the same month NZ exported 1400t.

Also in October, Australian lamb exports were 14% higher at 6038t whereas NZ sent 12,100t.

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