As the Christmas chilled export production comes to a close and processing returns to frozen, the lamb price drops in response to poor global forequarter and leg demand, and little prospect of help from China this year.
Some analysts suggest schedules could fall by $1/kg CWT by the end of the year and if the dry spell is as widespread as predicted, they could fall by more and some early producers of prime lamb are disappointed this years returns are behind last years.
New Zealand’s major markets of the UK, China, and the Middle East all show weak demand for frozen product and prospects look bleak for lamb producers over what could be a difficult summer, feed wise as well, with many analysts agreeing the $100 lamb average may not be achievable this year.
Positive news from Silver Fern Farm’s annual result with a significant $25million profit but more importantly a huge debt reduction from $288 million to $121million. And with the proposed Shanghai Mayling deal proposing to inject another $261 million capital this company looks well placed to improve shareholders future returns .
Many farmers have been claiming of colder than normal temperatures slowing the spring pasture burst as forage brassicas are now being sown but these will need early rains to produce good volumes to meet the predicted summer deficit.
The sheep numbers have fallen 4% to 28.6 million in response to recent changes in land use and poor returns, but the lower numbers have stimulated mutton sales again into China.
In the saleyards hogget prices have fallen with more spring lambs appearing, and the first numbers of stores were traded in Canterbury for $2.50-$2.80/kg lwt while in the North Island heavier weights from earlier lambs and more feed have attracted stronger bids.
The latest South Island wool auction saw less stylish finer merino fleece ease, but all other classes lifted in price, with mid micron, fine and coarse indicator prices all recovering strongly from the recent easing of wool prices.
The currency, that now days seems strongly linked to the dairy auction, weakened, and helped breathe life into a wool market that had seemed to run out of momentum.
Volatility seems to have affected the US beef market with falling domestic values dragging down the imported beef prices, and the rest of the years quota stocks hanging over the market.
The recent strong demand out of China has softened with supply increasing, and with better numbers now being processed nationally, this extra supply has eased the market further.
The prime steer saleyard market has dropped significantly with prices now in the $2.80-$2.90c /kg lwt range when only weeks ago they were well over $3/kg lwt.
Store prices has adjusted backwards slower, but even in the North Island where feed supplies are stronger, some dairy weaner bulls are now selling back at last years rates.
Processors are however positive for venison in the new season with demand reacting to the lower supply, and returns should at least match last seasons levels, subject to a reasonable currency.
Schedules are easing as the European chilled game market has reached it’s shipping deadlines, but optimism on growth of summer chilled sales into the US and Europe gives hope that the dependence on this market is weakening.
News that New Zealand trade officials are looking to progress Free Trade Agreement talks with European Union officials will excite venison and lamb producers as that region is an important market for both products.
Price news from early velvet sales has been hard to source reflecting a cautious start to the season, but fundamentals are still strong and prospects look positive given the present currency levels and a Korean excise tax that is due to be removed early 2016.