Outlook remains for sheepmeat producers

Sheep graze on swedes above State Highway 1 on the Taieri Plain this week. PHOTO: STEPHEN JAQUIERY
Sheep graze on swedes above State Highway 1 on the Taieri Plain this week. PHOTO: STEPHEN JAQUIERY
Sheepmeat prices are expected to stay at elevated levels over the remainder of this season and into the next, Rabobank animal proteins analyst Blake Holgate says.

Pricing levels out to the end of the season in October were expected to be at least as high as the mid $8 mark per kg seen last year and there could even be some "upside potential" on top of that.

Sheep meat supply from both New Zealand and Australia - the key exporters of sheepmeat to international markets - was expected to remain tight over the coming year.

New Zealand had limited capacity to lift domestic production, given where ewe numbers were at.

Similarly, Australia was unable to lift production due to drought conditions which had driven capital stock levels of sheep to among the lowest levels seen in 100 years, Mr Holgate said.

On the demand side, global lamb markets continued to perform well and demand and in-market pricing for key cuts were solid.

Global demand was expected to remain strong over the next 12 months as African swine fever was predicted to reduce China's domestic protein availability.

That would support strong Chinese demand for a range of lamb products and, particularly mutton.

United States demand for sheepmeat should remain firm, following a prolonged period of economic expansion which had led to increased rates of red meat consumption and more disposable income to spend on expensive products like red meat.

A weaker New Zealand currency was another factor expected to play into the hands of New Zealand sheepmeat producers, he said.

While all signs pointed to a "rosy" year ahead for the sheepmeat sector, there were down-side risks that could adversely impact sheepmeat pricing.

Those included concerns over a slowing global economy, an over-estimation of the impacts of African swine fever and the fallout from Brexit.

A 12-month SILERE alpine origin merino contract has recently been released by the joint venture between Alliance Group and the New Zealand Merino Company.

The product was now available from UK online supermarket retailer Ocado. With 580,000 active customers, it represented a "significant" opportunity for both SILERE and Alliance Group's premium product portfolio, Alliance general manager sales Shane Kingston said.

Online supermarkets provided a strong vehicle to tell a brand story directly to the consumer and Ocado was profiling farmers that produced SILERE, he said.

Central Otago farmers Andrew and Tracy Paterson, who have supplied the SILERE programme since its launch, were thrilled with the connection with the end market and the feedback from those buying it.

The product was sold in plastic-free recyclable `Earthpouch' packaging. The Earthpouches are made from paper with a plastic-free heat-sealable coating, which formed a grease, water and moisture barrier. The pouch was recyclable as part of the paper stream and was suitable for repulping.

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