It is safe to say that the winter season has been atypical of the normal trends.
Typically a quieter time for the markets, August in particular was anything but.
Store and slaughter prices rocketed up as supplies began to dwindle, setting up an even busier start to spring.
The elephant in the room has been lamb, where a large early kill this year has left processors scrambling for numbers.
This spike in competition sent schedules upwards by 35-65c/kg through August.
This resulted in some hefty prices paid on forward-store lambs that can be finished quickly.
While most of upside has been procurement driven recently, there has been some positive movement in export markets.
There is no denying that the Chinese market has been below par for almost a year, but buyers are beginning to show a bit more interest in securing lamb for the Chinese New Year celebrations in late January 2025.
The high inventory China had on hand has been chipped into and buyers are now looking to top inventory up for the festive period.
As our supply is limited, orders for the European chilled Christmas trade have been reasonably successful as buyers have had to be competitive to secure lamb.
The United Kingdom market is steady, but sales have been limited there as lamb weights are increasing beyond their desired weight range.
Australia continues to be our largest competitor and current weather conditions may see their new-season lambs processed around the same time as our new-season lambs come on stream. This will increase supply and potentially make for a harder job for our exporters.
When it comes to the beef market, procurement pressure has been evident on slaughter prices. This has boosted confidence, leading to record high store prices in August.
But while the domestic market has been hot, export markets have had a quieter period of trading. Procurement pressure has been welcomed by farmers, driving schedules higher, but the lower inventory has meant that New Zealand exporters have less beef available to offer export markets.
There continues to be a lack of demand from Asian markets, with limited sales.
Although China is purchasing beef, it is in limited quantities, and they are not prepared to open their pockets too wide.
Japan has been a bit more positive, as the recovering tourism industry has supported some hospitality demand. Export volumes to Japan for the three-month period May-June were nearly 45% stronger than the five-year average at 13,770 tonnes.
As with lamb, Australia continues to pose a risk to the New Zealand beef market, posting record-high exports in July of 130,000 tonnes. Exports eased slightly to 121,800t in August but this is still a record high for the month.
Australia continues to target the United States market, shipping nearly 80,000t there in the past two months.
US beef production continues to decline and Australian exports to the US have been progressively increasing since February, buoyed by stronger prices.
A softening in demand from China has also been a catalyst for a refocus on the US.
However, more recently, the US has been trying to barter down imported beef prices, which could suggest Australia is accepting lower money to try to offload surplus beef.
Australia’s national cattle slaughter is tracking 13% ahead of the five-year average from the beginning of the year to the start of August.
This article was written by AgriHQ analyst Sara Hilhorst. Subscribe to AgriHQ reports here.
