AgriHQ report July 16

The good times keep on rolling for those with lambs to finish last week. Operating prices (schedule plus premium) continue to firm driven by procurement competition for the limited supply. $7.80-$8.00kg is the range in the North Island last week and $7.70-$7.90kg is being paid in the South Island.

Further increases in lamb prices going forward will be eroding processor margins as the export market is fully priced. Processors will be reluctant to see procurement rates push much higher this early in the season, knowing that further margin erosion will be inevitable as spring approaches. The July AgriHQ outlook estimates the North Island lamb price in October to sit at $8.35kg and at $8.15kg in the South Island. Store lamb prices in both islands continue to push to new levels, supported by the firm outlook for lamb prices.

Scanned-in-lamb ewes have pushed over $200 in the early South Island sales and are more commonly $170-$190 in the North Island.

BEEF

Global beef exports continue to grow rapidly, however average prices have performed solidly against the backdrop of increased supply. Total world export volumes for the period January to May 2018 are up over 13 percent on the same period last year.

The additional volume is equivalent to just under NZ’s total export production for this period. For the period January-May, the main growth has come from Brazil, Australia and the US, all up 12-13 percent on the same period last year.

Half of the beef exports for the period have come from South America, with Brazil accounting for 28 percent of the total export production. Australia has flexed its muscles so far this year, and its beef exports account for 26 percent of total world export volumes. The US is not far behind. New Zealand export production for the period makes up 13 percent of the total volumes. The average global beef price has more than held its own under these additional volumes, firming 3 percent on the previous year (January-May).


The good times keep on rolling for those with lambs to finish last week. Operating prices (schedule plus premium) continue to firm driven by procurement competition for the limited supply. $7.80-$8.00kg is the range in the North Island last week and $7.70-$7.90kg is being paid in the South Island.

Further increases in lamb prices going forward will be eroding processor margins as the export market is fully priced. Processors will be reluctant to see procurement rates push much higher this early in the season, knowing that further margin erosion will be inevitable as spring approaches. The July AgriHQ outlook estimates the North Island lamb price in October to sit at $8.35kg and at $8.15kg in the South Island. Store lamb prices in both islands continue to push to new levels, supported by the firm outlook for lamb prices.

Scanned-in-lamb ewes have pushed over $200 in the early South Island sales and are more commonly $170-$190 in the North Island.

BEEF

Global beef exports continue to grow rapidly, however average prices have performed solidly against the backdrop of increased supply. Total world export volumes for the period January to May 2018 are up over 13 percent on the same period last year.

The additional volume is equivalent to just under NZ’s total export production for this period. For the period January-May, the main growth has come from Brazil, Australia and the US, all up 12-13 percent on the same period last year.

Half of the beef exports for the period have come from South America, with Brazil accounting for 28 percent of the total export production. Australia has flexed its muscles so far this year, and its beef exports account for 26 percent of total world export volumes. The US is not far behind. New Zealand export production for the period makes up 13 percent of the total volumes. The average global beef price has more than held its own under these additional volumes, firming 3 percent on the previous year (January-May).


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