Strong New Zealand lamb and mutton prices expected in 2018-2019

Beef and Lamb New Zealand has forecast slight increases in farm-gate prices for lamb and mutton in 2018-2019.

This comes as prices are expected to remain relatively stable in New Zealand’s main export markets, while the New Zealand dollar (NZ$) is also expected to ease.

Andrew Burtt, Beef and Lamb New Zealand’s chief economist, said: “This follows the exceptionally strong average farm-gate prices for lamb, mutton and beef in the 2017-18 season.”

However, he noted that the value of the New Zealand dollar has a large bearing on the sector’s outlook.

The New Zealand dollar is expected to ease, as the economies of our major trading partners strengthen in 2018-2019 – principally against the US dollar in which over 70% of red meat exports are traded.

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 and mutton is also expected to remain strong in all of New Zealand’s major red meat export markets.

However, New Zealand’s export lamb production is forecast to decrease by 1.7% in 2018/2019 due to a smaller lamb crop. This is the result of a fall in the number of breeding ewes this year, as farmers took advantage of high mutton prices.

The farmer-owned organisation is also pointing to a reduction in mutton exports (-17%) because of the smaller and younger breeding ewe flock.

As a result of all these factors, total lamb exports are estimated to remain at around NZ$3.1 billion in 2018-19, after breaking the NZ$3 billion mark for the first time in the 2017-18 season.