Prices to ‘remain firm’ for New Zealand beef, lamb and mutton

The report said the expected weakening of the New Zealand dollar and strong export demand had helped with this.

It forecast a slight increase in farm-gate prices for lamb and mutton in 2018 to 2019, as prices were expected to remain relatively steady in New Zealand’s main export markets. It also expected there to be a benefit from an anticipated easing of the New Zealand dollar. 

B+LNZ chief economist Andrew Burtt said: “This follows the exceptionally strong average farm-gate prices for lamb, mutton, and beef in the 2017-18 season.”​

Burtt said the value of the New Zealand dollar had a large bearing on the sector’s outlook.

“The New Zealand dollar is expected to ease as the economies of our major trading partners strengthen in 2018-19 – principally against the US dollar in which over 70% of red meat exports are traded,”​ he said.  

The report also said that a combination of tighter mutton supply from both Australia and New Zealand, and growing global demand were expected to continue to drive an increase in the average export value of mutton, which influenced lamb prices.

It said demand for lamb, mutton, and beef was expected to remain strong in all New Zealand’s major red meat export markets.

New Zealand’s export lamb production was forecast to decrease by 1.7% in 2018-2019, due to a smaller lamb crop. This was the result of a fall in the number of breeding ewes this year as farmers took advantage of high mutton prices.

Mutton exports were also forecast to be down by 17% because of the smaller and younger breeding ewe flock.

Beef and veal export volumes were expected to decline by 3.1%.

The report said that New Zealand’s beef cattle herd grew by 1.9% to 3.68m head at 30 June 2018. Sustained strong cattle prices and the lower labour requirement associated with cattle, had encouraged farmers to maintain or lift herd sizes, particularly in the South Island.

As a result of all these factors, total lamb exports were estimated to remain at around $3.1bn while beef exports were forecast to be around $3.4bn in 2018-19.

“Farm expenditure for 2018-19 is forecast to increase overall, but revenue is also expected to increase, driven by a lift in farm-gate prices which we expect will increase revenue from sheep, wool, and cash crops,”​ said Burtt.