Monday, April 22, 2024

SI lamb buyers bid up large

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Record high South Island lamb prices, coupled with encouraging activity in export markets, have sparked industry optimism heading into the new season. The lamb slaughter indicator has officially cracked a record high $9 a kilogram mark, with further upside still expected ahead of spring.
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Record high South Island lamb prices, coupled with encouraging activity in export markets, have sparked industry optimism heading into the new season.

The lamb slaughter indicator has officially cracked a record high $9 a kilogram mark, with further upside still expected ahead of spring.

Canterbury prime lamb sales offered up good yardings, as high prices attracted larger numbers of lambs to the sale yards.

A lift in the quality was also noted as buyers bid up large.

The tops of the prime lambs at Temuka sold up to $260, while the bulk of the yarding ranged from $201-$248.

Canterbury Park followed suit and while a smaller yarding, prices pushed up to an impressive $290 for one pen of blackface lambs, the highest price at Canterbury so far this year.

Most of the heavy lambs offered sold at $276 and $282, with the balance of the better types making $219-$251.

PGG Wrightson Canterbury livestock manager Grant Nordstrom says current buying is generally buoyed by a dismally low lamb supply for this time of year.

He says normally in other years prime lamb weight is capped, but this is not the case this year.

“Processors are desperate to get their hands on whatever they can and weight capping hasn’t come into it this year,” Nordstrom said.

“Pretty much it’s all third party buying on weight, so the bigger the lamb the more they pay and we have seen some good-sized lambs coming through the yards.”

While the covid lockdown will temporarily settle the pressure with limited kill because of adjusted processing capacity, Nordstrom says the season’s rush is yet to come.

“It’s been a good winter and there’s a lot of lambs out there yet and with grass seed crops coming in later, farmers are hanging on to the lambs for a bit but come spring the cropping farmers will be looking to get lambs off,” he said.

With prices stronger early, predictions are they will stay high for longer.

“It’s hard to say where new season’s pricing will settle, demand will dictate that, but it’s looking towards staying higher for longer,” he said.

Nordstrom says this would more likely be the case in the South Island, where numbers are down as a flock rebuild happens following the decline last season because of the severe drought.

Encouraging activity in the export market means that processor margins are still looking agreeable for this time of the season.

The AgriHQ Insight reports the EU lamb rack market is making a good recovery with frozen boneless short loin prices in the EU very nearly back to pre-covid level.

The US lamb rack price is also showing some buoyancy and while still some way off the highs achieved prior to the pandemic, this indicator and the exchange rate are heading in the right direction.

While pre-Christmas minimum price lamb contracts at $7.50/kg have hinted some ambition from processors to ratchet back the lamb price when the new season lambs boost supply, a new contract from a smaller processor is playing a different tune with December pricing at $8.40/kg.

Meanwhile, export markets for lamb remain solid with tight production levels through August combined with higher interest, enabling farm gate prices to remain strong.

AgriHQ still expects prices to be averaging above $8/kg through December.

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