As dairy prices continue to stumble, beef prices rumble on in New Zealand according to Nathan Penny, ASB Rural Economist.

Beef prices in New Zealand have set new records. Penny says the ASB Beef Index has set a new record in each of the last five weeks and, as at October 10, stands over 5% higher than the previous peak back in September 2008.

He noted the remarkably tight US beef market due to the its beef herd being at record lows has boosted beef prices to new record highs. Moreover, given the time it will take  to rebuild the herd, the US Department of Agriculture has speculated that  it may not be until 2017 before US beef production expands again.

Penny says from here it would be ambitious to expect further large price increases as  consumer resistance to high prices is likely to kick in.

“Instead, we expect beef prices to bubble around their current high levels for this season and into next.”

After setting their own record previously this year, the milk price has headed for the doldrums. After falling in 14 out of 15 Fonterra auctions, overall dairy prices finally caught a break, rising 1.4% in the October 15 auction.

According to Penny while farmers will welcome any price rise, in the case of the banks milk price forecast it’s too little, too late.

“Following the auction we revised our 2014/15 forecast down by 20 cents to $5.10/kg of milk solids. We have, however, kept our 2015/16 and long-run forecasts unchanged.”

Penny outlined that somewhere in between are lamb and wool prices. Meanwhile, the lower NZ dollar is providing a dash of welcome support across the board.

While export lamb price increases continue to slow, the depreciating NZ Dollar is giving lamb prices in a second wind. Also as Australian slaughtering slows over the season, Penny expects lamb prices to hover at or near their current levels.