Bank expects better meat prices

 Farm-gate venison prices are expected to improve. Photo: Stephen Jaquiery.
Farm-gate venison prices are expected to improve. Photo: Stephen Jaquiery.
Westpac has upgraded its farm-gate meat price forecasts on the back of strong demand in key markets, including the United States, European Union and the United Kingdom.

In a monthly update, senior agri-economist Nathan Penny said those economies were rebounding as the rollout of Covid-19 vaccines progressed, with the added impetus for demand as people headed out more to restaurants and other food service outlets. That boost added to the demand strength already present in China.

Westpac was now expecting farm-gate lamb prices to "surge" over the remainder of the year, lifting comfortably above $8/kg, if not surpassing $9.

It expected farm-gate beef prices to lift to $5.50kg, although the weak US dollar would temper that rise.

The broad strength in New Zealand’s key export markets would translate into broad strength across all meat sectors.

That meant venison prices, which had been hardest hit by Covid, were also likely to turn the corner as European meat demand returned.

Venison prices had remained very weak so far over 2021. Prices had slid more than 5% and the early readings for May hinted they had not bottomed.

There was "light at the end of the tunnel" for producers. In the key German market, the Covid-19 vaccine roll-out would help boost demand and prices this year.

The pick-up would be gradual, reflecting the relatively slow pace of growth in Germany, and the farm-gate price pick was expected in the second half of the year.

Venison prospects would be a hot topic at the deer industry conference which begins today in Invercargill.

Fine and mid micron wool prices were likely to lift as strength returned to northern hemisphere apparel markets.

Very high feed grain prices would constrain global beef production this year. That should support beef prices through 2021 and into 2022 and would help other meat prices too.

For sheepmeat supply, the New Zealand flock had shrunk following last year’s drought. Australia’s sheepmeat supply was relatively weak, so tight supply should underpin sheepmeat prices.

Westpac’s latest Economic Overview said New Zealand commodity prices surged to record highs in March and again in April and it was expected more records would tumble over the remainder of the year.

All up, prices had jumped 17% so far this year.

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