NEW ZEALAND, Wellington. As the 2018/19 meat export season begins, Beef + Lamb New Zealand’s (B+LNZ) New Season Outlook 2018-19 report forecasts beef, lamb, and mutton prices to remain firm at historically high levels, helped by an expected weakening New Zealand dollar and strong export demand.
B+LNZ forecasts slight increases in farm-gate prices for lamb and mutton in 2018/19, as prices are expected to remain relatively steady in New Zealand’s main export markets and benefit from an expected easing of the New Zealand dollar. The New Zealand dollar is expected to ease as the economies of our major trading partners strengthen in 2018/19 – against the US dollar in which over 70% of red meat exports are traded.
This follows the exceptionally strong average farm-gate prices for lamb, mutton, and beef in the 2017/18 season. A combination of tighter mutton supply from both Australia and New Zealand, who contribute the vast majority of international sheepmeat trade, and growing global demand is expected to continue to drive an increase in the average export value of mutton, which influences lamb prices.
China’s demand for red meat from all sources is expected to continue to grow, but demand for lamb, mutton, and beef is also expected to remain strong in all New Zealand’s major red meat export markets.
New Zealand’s export lamb production is forecast to decrease by 1.7% in 2018/19 due to a smaller lamb crop, which is the result of a fall in the number of breeding ewes this year as farmers took advantage of high mutton prices.
Assuming close to average climate conditions in 2018/19, beef and veal export volumes are expected to decline 3.1%, as farmers build their herds. New Zealand’s beef cattle herd grew by 1.9% to 3.68 mill. head at 30 June 2018, the second small increase in a row after declining steadily since the 1990s. Sustained strong cattle prices and the lower labour requirement associated with cattle has encouraged farmers to maintain or lift herd sizes, particularly in the South Island.
As a result of all these factors, total lamb exports are estimated to remain at around $3.1 bn. in 2018/19, after breaking the $3 bn. mark for the first time in the 2017/18 season. Beef exports are forecast to be around $3.4 bn. in 2018/19, a 4% decrease on 2017/18.
Overall the report forecasts farm profit before tax to decrease 2.8% to $129,700 for 2018/19 on average for New Zealand sheep and beef farms.
There is potential for international sheepmeat and beef trade to be disrupted in 2018/19 because of geopolitical uncertainty, large-scale droughts, and disease outbreaks in competing animal proteins, the outlook for New Zealand’s sheep and beef sector is positive.