February 8, 2011
New Zealand sees strong, stable meat prices
Beef + Lamb New Zealand's (B+LNZ) mid-season update for the sheep and beef sector reports distinct rises in offshore prices, despite prolonged recoveries from recession in North America and the EU.
While the export price increases are being moderated by the continuing strength of the New Zealand dollar, lamb, mutton, beef and wool prices are all up on last season.
B+LNZ Economic Service Director Rob Davison says the Mid-Season Update contains few surprises.
"All indications are that lamb prices will remain strong and stable for some time to come, thanks to tight global supplies. We expect 19.3 million head of lamb to be exported, which is a drop of 7.7% compared with last season. This significant decrease is due to the adverse weather conditions during spring lambing. Despite the lower volume of lambs, higher prices will see export receipts for the season total around US$2.6 billion – much the same as last year," Davison said.
Limited supplies of cattle from Australia and New Zealand, combined with robust demand for ground beef in the US, are keeping imported lean beef prices strong.
"The exchange rate will determine how this demand translates through to farm-gate prices. It is predicted that 2.17 million head of cattle will be processed this season, 3.5% less compared with 2009-10, when the slaughter tally was high because of drought conditions in the north," added Davison.
Davison says the country's average sheep and beef farm profit before tax reflects the positive price outlook for meat and wool. "The average profit per farm for 2010-11 is estimated to be US$67,600, up 11% on last year. This is the highest farm profit since 2004-05, when the average profit per farm was US$87,800 in inflation-adjusted terms. This year's profit will be achieved as a result of farmers keeping a tight rein on farm expenditure, which is estimated to be up 2.2% on last year – less than the 3.1% increase in prices paid for farm-inputs, such as fertiliser and cartage," he said.
