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A drop in slaughter rates in New Zealand, the world's largest exporter of lamb meat, has pushed up prices to multi-year highs in export markets.
Benchmark frozen lamb prices for legs, french racks, forequarters and flaps all lifted in March, according to AgriHQ's latest monthly sheep & beef report.
Demand for lamb in overseas markets is coming at a time when supplies are lower than normal in New Zealand as good grass growth prompts farmers to retain their stock for longer to increase their weights.The latest lamb slaughter data for New Zealand shows the lamb kill in the fortnight to March 11 was 11 per cent below the same period a year earlier and 18 percent weaker than the five-year average, AgriHQ said.
"The overseas lamb trade held in exporters favour in March," AgriHQ analyst Reece Brick said in his report. "Enquiry is still coming in at a steady rate, but low slaughter rates and the fact that some exporters have already forward sold significant portions of current production has left the international lamb trade short on product. The short-term outlook is positive."
The benchmark price for a frozen leg of lamb in the UK rose to 4.80 British pounds/kg in March from 4.60 pounds/kg in February, 3.45 pounds/kg a year earlier, and the highest level since July 2014, AgriHQ said. In the European Union, the benchmark increased to 5.70 euro/kg from 5.60 euro/kg in February, 5.40 euro/kg a year earlier, and the highest level since July 2015.
For frozen french lamb racks, the benchmark price in the US rose to US$8.25/kg from US$7.60/kg in February, US$6.50/kg a year earlier and hitting the highest level since January 2013. In Europe, the benchmark rose to 16.75 euro/kg from 16.50 euro/kg in February, 12.75 euro/kg a year earlier and the highest since April 2012.
The benchmark lamb flap price increased to US$5.75/kg from US$5.60/kg in February, US$3.80/kg a year earlier and at the highest since September 2014, AgriHQ said.
AgriHQ's Brick noted that it has been easier for meat processors to source lambs in the South Island than in the North Island, where processors have found it "particularly difficult" to source lambs for slaughter in recent weeks.
"Weather conditions have fallen in farmers' favour since late summer, and they are therefore sitting on what numbers they have until they reach desirable kill weights," he said.
Brick said industry estimates for lamb numbers this season also appear to have been too high, which means it's debatable how many lambs remain to be slaughtered.
Meat is New Zealand's second-largest commodity export product behind dairy.