High dollar making farmers nervous

Store lamb prices are steady and demand is being described as reasonable as farmers wait to see what happens to prime stock prices after the Christmas break.

The schedule fell 15c a kg last week but PGG Wrightson head auctioneer Robin Gamble said the store auction price remained steady at $2.30 a kg for medium- and light-quality lambs.

Meat companies and PGG Wrightson were buying store lambs on farms for about $2 a kg.

The lambs would be grazed under contract until prime.

Mr Gamble said store lamb buyers were nervous about what would happen to the prime lamb price given exporter concerns about the movement of the New Zealand dollar, which broke through the US73c mark last week.

There was little hype in the lamb market this season, he said, and if the schedule stayed at current levels of above $4 a kg, farmers would be relatively happy.

"It's OK.

Once things stabilise, we will see people become a little happier."

Lambs have largely been sold from traditionally dry areas of Central Otago, the Strath Taieri and the Canterbury foothills, and even though reliable-rainfall regions have been wetter, Mr Gamble said feed conditions there were still difficult.

A two-week run of on-farm store lamb sales has started, which Mr Gamble said would provide a lead for farmer confidence and market strength.

Late last month, Alliance Group chief executive Grant Cuff said at an exchange rate of US71c and 0.49, he expected prime lamb prices from January to April to be between $68 and $72.

But strong ram prices provide some good news for the sheep industry.

PGG Wrightson Otago stud stock representative Roger Keach described the Wharetoa Genetics sale just before Christmas as "outstanding".

Garth and Chris Shaw offered 314 rams, which sold for an average of $958.