The latest average export value data released has finally delivered some positive news to the lamb and beef markets.
May’s lamb average export value (AEV) lifted 67/kg month-on-month to $10.42/kg. While this was 66c/kg behind the five-year average for May, it is the closest value to the five-year monthly averages all season and returns to last October’s level.
The increased activity from export markets has flowed through to lifting farmgate prices. This has given processors a little more wriggle room to inject some procurement competition into the system, particularly as slaughter supplies slump. Further upside in export prices will solidify any further increases at the farmgate.
Recent positivity stemming from Japan suggests this market is becoming more competitive for New Zealand lamb, upping its consumption from 440 tonnes in April, to 630t in May. Although China remains our largest lamb market in volume, increasing by 305t in May, this market continues to be weak in terms of value.
The European Union, United Kingdom and United States have all increased their inquiries and in recent weeks this has translated to further upside in export prices.
Demand for higher yielding, higher priced cuts from the EU and UK is supporting this market, coupled with a tightening lamb supply.
While Australia continues to pour record volumes of lamb into global markets, New Zealand retains a competitive edge in the EU and UK market because of easier trade access and our smaller carcases better suit the needs of the UK consumers.
NZ exported a total of 35,500t of lamb in May – the highest monthly volume since March 2021. This comprised 30,600t of frozen and 3000t of chilled lamb.The fact that NZ is exporting more but also seeing a corresponding lift in export values suggests the market may be turning a corner.
Focusing on the EU, NZ exports there jumped to 7000t, up from 5700t in April. Exporters welcomed strong demand for chilled boneless legs. This supported the fourth consecutive month-on-month lift in the chilled AEV to $18.28/kg.
This sits 52c/kg above the five-year average for May. Frozen demand from the EU lifted 25% in May from April but at an AEV of $9.66/kg, this is still below the five-year average for May of $10.27/kg.
The positive trend continues in the beef market too. The monthly AEV for May lifted to its highest level since November 2022, to $9.46/kg.
Broken into chilled and frozen, chilled lifted $1.17/kg to $17.71/kg, and frozen supplies were 70c/kg stronger at $8.90/kg.
In May, volumes shipped to the US lifted substantially to 24,150t – the highest monthly volume dispatched in six years. Just over 18,000t of this was manufacturing beef, a month-on-month increase of 4300t.
But there has also been strong support for higher-valued, chilled boneless cuts that hit 758t, the largest volume since December 2021. Exponential growth in demand for these from the US this season has supported export pricing and flowed to farmgate prices.
China’s beef purchases are more subdued. New Zealand shipments in May dropped to 14,880t, which sees it slip behind the US as New Zealand’s largest market season to date.
While there is a weakness in volume demanded, there is also a weakness in pricing. China decreased its demand for more expensive chilled cuts in May and turned to cheaper frozen cuts.
This trend is similar to lamb and while China navigates its weak economic conditions, this is unlikely to change consumer behaviour in a hurry. But thankfully, New Zealand can turn its focus to other markets that are encouraging.
This article was written by AgriHQ analyst Sara Hillhorst. Subscribe to AgriHQ reports here.
In Focus Podcast | Stud bull prices have end of season surge
With our regular host Bryan Gibson still laid low with covid this week, senior journalist Richard Rennie talks to senior journalist Hugh Stringleman.
Stringleman unpacks some of the recent record prices paid for Angus stud bulls at this late point in the selling season, coming after a relatively lacklustre round of stud sales in past weeks.
He also talks in detail about the challenge facing Synlait as it seeks to raise $130 million to pay off loans due in early July.
