Start of export meat season best for years

NZ, HEATHER CHALMERS November 9 2017

The venison market is booming, with supplies at an all-time low and prices at an all-time high.

Record returns of more than $10 a kilogram for venison and more than $4/kg for mutton point to one of the brightest starts to the meat export season for many years.

Demand and pricing for lamb is also strong.

While export returns typically peak in spring, as exporters compete for limited supplies of livestock to fill higher-value chilled markets, prices are still well up on the same time last year.

Both venison and lamb are up more than $1/kg from the same week in 2016, while mutton is up more than $1.50/kg. Venison is a particular standout with supply at an all-time low and prices at an all-time high.

Exporters say that while prices will inevitably decline as bigger numbers of livestock come forward for slaughter after Christmas and chilled markets finish, the drop away in returns should not be significant. On present forecasts, export markets could still be paying around $6/kg for lamb and at least $9/kg for venison by mid-season.

Alliance Group general manager livestock and shareholder services Heather Stacy said it did not expect much heat to come out of the lamb market until mid-February when the Easter chilled market finished.

Mutton prices were also expected to remain strong until the completion of the Chinese New Year market, with Alliance offering a contract at $4.80/kg until the second week of December. A contract specifically for hoggets was paying $5.20/kg on a sliding scale down to $5/kg by February. This was an opportunity for farmers such as those with merinos born last year that may have cut their teeth.

For venison, Alliance was offering a contract of $10.35/kg for a 60kg stag for the chilled market. While prices normally drop away once this ends its sales and marketing team were not seeing any signs of an immediate slide, with venison expected to stay strong into the start of next year.

In contrast, beef prices were flat and expected to ease in the first quarter of 2018 as bigger volumes become available from Australia, the United States and Brazil after herd rebuilding, Stacy said.

Alliance Group general manager sales Murray Brown said lamb prices were boosted by low inventories, both in New Zealand and overseas. As prices rose, New Zealand exporters needed to be mindful of where lamb was positioned versus alternative proteins. “Lamb is still a special-occasion treat product.” Animal by-products such as skins, casings and bone meal were also selling well, with wool the main concern.

Mutton prices had risen on the back of low volumes of lamb, with some consumers using mutton as a substitute. Demand should remain strong until the end of the Chinese New Year market.

For venison, low livestock numbers were underpinning pricing. Venison had moved away from the traditional European game meat market dominated by Germany into the United Kingdom and a mix of European countries as well as the high-paying US. The product itself had also diversified with growing demand for offals, not just the prime cuts.

While an adjustment in schedules was expected once slaughter volumes increased, base fundamentals were looking positive, said Brown.

In its latest supplier update, Silver Fern Farms said demand was particularly strong for venison. “Supply is at an all-time low and prices at an all-time high.”

All sheepmeat markets except the Middle East were strong. “Mutton is at an all-time high with prices driven by demand out of China and Taiwan.”

In terms of pricing, Silver Fern said lamb farm gate returns could range from $6 to $7/kg from mid-November through to Christmas, dropping to $5.60 to $6.20/kg by mid-season. The outlook for mutton was also favourable on the back of strong demand from China, with pricing ranging from $4 to $4.80/kg into early January, dropping to $3.50 to $4/kg by mid-season after Chinese New Year.

For prime beef, pre-Christmas farm gate pricing could range from $5.20 to $5.60, dropping to $4.80 to $5.30/kg by autumn.

For venison, farm gate pricing could range from $9 to $9.80/kg after the chilled season was completed, with prices not expected to ease back as sharply as normal given strong demand across the board for frozen product as well.

Federated Farmers national meat and fibre chairman Miles Anderson, of South Canterbury, said it was “so far, so good, particularly for sheep farmers looking for a good start to the season for a change”.

After a wet winter and spring, lamb growth rates were a couple of weeks behind in some regions, but a spell of warm days meant farmers had plenty of feed.

Ewe and lamb prices were positive and if wool returns could lift then sheep farmers would “have the trifecta”. Lamb prices needed to be at least $6/kg even during the peak kill for sheep farmers to make a return, Anderson said.