Lower lamb prices expected, but firm for beef

MPI Situation and Outlook update December 2012New Zealand’s meat processors and farmers can expect lower lamb prices over the remainder of the 2012/2013 production season, while beef prices are expected to remain firm over the next two years, says the Ministry of Primary Industries (MPI).

Deteriorating global economic conditions are having a significant impact on returns for New Zealand’s primary produce, according to the MPI’s recently released half-year update to the annual Situation and Outlook for Primary Industries report, which was published in June.

The update shows there has been strong pastoral production so far in the 2012/2013 season. “This is partly due to favourable climatic conditions during the previous season which left breeding stock in good condition and also ongoing expansion of the dairy herd,” says Chris Jones, manager of economic information and analysis for MPI’s sector policy division.

However, MPI reports the continuing economic slowdown, particularly in the traditional markets of the European Union, is causing weaker demand for some products such as lamb resulting in lower lamb prices. In addition, the strengthening of the New Zealand dollar against most major trading currencies in recent months is having a dampening effect on farm-gate returns for primary produce.

In contrast, beef prices are expected to remain firm over the next two years, following a major drought in North America affecting production there.

As a result, primary sector export revenue for the year to June 2013 is forecast to be around $27.5 billion, down five percent on the previous year ($29.2 billion).



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