Thursday, September 09, 2010
Vital Statistics
23 Aug 2007
Beef and lamb prices easing
There has been some downward pressure on beef and lamb prices over the past few months. This has been driven to some extent by drought conditions overseas inducing higher than normal rates of slaughter as farmers clear stock. This has seen world prices for lamb, in particular, fall.
On the domestic side the volume of sheep slaughtered has risen over recent months. For the year to March 2007, there were 578,000 tonnes of sheep slaughtered, up 7.9% on the levels a year ago. The main reason for this has clearly been the drought on the east coast of the North Island as farmers clear stock. There has not been the same pressure on beef slaughter rates with the level to March 2007 only 1.3% higher than a year earlier. Still as the RB recently commented “higher slaughter now means lower slaughter later” which should help lift returns to farmers.
 Rabobank has reported that beef schedule prices have shown some signs of improvement during May but remain 3-5% below last year. Farm gate lamb prices have finally lifted over recent weeks. International prices have also lifted during May providing a better price footing than was evident earlier in 2007. Still many sheep farmers are likely to have a second consecutive annual cash flow loss for the year ended June 2007.
Processors too seem to be feeling the pinch with Affco reporting a NZ$15.9m loss announced in its half year results to March 2007, compared to NZ$4.1m, profit last year. They cited a tough international lamb market as a key contributing factor. Rabobank commented that “it is suspected that some processors are still building balance sheets in 2006/07 off the lamb market and covering for reduced margins on beef”.
As international and domestic sheep and beef producers rebuild their herds, global prices for both meat and beef should recover. The RB commented that there “is also potential for prices to remain permanently higher if increased feed costs (the possible impact of bio-fuels) prevent some of this herd re-stocking.”
The latest export data paints a rosier picture of meat exports. Statistics New Zealand quantity of meat export figures report volumes in the year to March were up 6.3% on the previous March year. Export revenue for the March year was up 8.9% to $4.986bn.
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