February 3, 2012

EU's lamb slaughter numbers up in January

The first two weeks of January have seen the season-to-date lamb slaughter in the South Island with an increase of 1% from the same period last year.

Dry conditions in the south, combined with pent-up supply due to plant closures over the Christmas/New Year period, resulted in the first full week of January being the highest lamb kill week in the South Island since March 2010. However, processing is 14% behind in the North Island, so the New Zealand total is still lagging last season by 6%, or 400,000 head.

Stocks of lamb in Europe remain too high for importers' liking, especially considering the uncertain economic outlook. The constant pressure has continued to wear down prices on a weekly basis.

Schedule prices continue their downward spiral this week, with price drops of EUR0.10 (US$0.13) per kilogramme on average for both North and South Island processors.

It has been a quiet week in Asia on the beef trade front, with Chinese New Year celebrations taking place in several key markets. While buying activity grinds to a halt over this period, it is an important time for beef consumption. Great interest will be taken in importers' follow-up orders from these countries in the coming weeks, giving a strong indication of the health of beef demand in these vital prime meat markets.

Meanwhile, the lofty prices in the US imported beef market have meant some hesitancy has started to creep in over the past week. Prices are just US$0.01 per pound shy of their all-time highs and buyers want to be confident that end user demand is sufficient before prices push into uncharted territory.

Processing schedules are being squeezed down again this week to make beef more profitable for meat processors. Most companies have knocked at least EUR0.10 (US$0.13) per kilogramme off most beef.