Increased prices for New Zealand and Australian lamb on the back of reduced supplies in the southern hemisphere are likely to bolster the UK sheep meat trade in the coming months according to a new report.

Since the start of 2024, prime lamb values in New Zealand have been substantially pressurised due to the reduction in the national flock.

At the end of March, values hit a low of 284.8p per kg and since then have scraped above the 300p per live kg at the end of June.

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In the past three weeks ending August 10, New Zealand lamb prices increased from 312.9p/kg to 331.2p/kg – a value last seen in October 2023 when the kill transitioned between new and old season, providing procurement competition – making imports to the UK unviable.

Reports from down under claim the seasonal reduction in finished lamb numbers has come earlier than previous years, and quicker than some expected, which in turn has increased prices.

The typical New Zealand slaughter year runs from September-September.

However, this year’s slaughter declined to seasonal lows by early July – a good two months earlier which as a result is expected to bolster trade in the southern hemisphere.

Australian lamb

Australian lamb prices have also strengthened over the past month, reaching a peak of 450.6p/kg at the end of July, before moving down to 416.4p/kg for the week ending August 11. This was preceded by months of down turned prices, following record-high slaughter levels of prime lambs.

Rabobank also says prices could be further buoyed in the southern hemisphere due to a slower stream of new season lambs coming forward which would usually start in the coming weeks and months.

This is due to increased numbers of sheep being slaughtered including replacement ewes over the past year, and is likely to curtail the number of lambs available to kill at the beginning of the season.

Increased prices for lamb down under make imports less attractive to UK buyers too.

While lamb imports from the southern hemisphere have been higher than 2023, with Australian and New Zealand prices on the rise, and potentially set to continue to grow as supplies tighten in the short term, the import incentive is expected to weaken further.

It is a trend which could continue when drought and on-going low returns for sheep meat have seen sheep numbers in New Zealand fall further on 2023 totals.

Figures from Beef and Lamb New Zealand reveal sheep numbers fell 4.3% in the year to the end of June to to 23.31m, with breeding ewe numbers down 2.9% while hogget numbers dropped 7%.

Drought

In previous years, the main reason sheep numbers were in decline was due to the conversion of sheep and beef farms into forestry. This year the primary drivers have been low sheep prices and drought in parts of the country.

Softer demand from China coupled with Australia flooding markets with increased supplies of sheep meat have also resulted in plummeting values for lamb in New Zealand. In addition, rising input costs means many Kiwi sheep farmers are set to make a loss this year.

“Livestock that might typically be wintered were sold to improve cashflow, additionally capital livestock were sold to bolster revenue as well. This loss of capital livestock will reduce lamb and calf crops in spring 2024 and affect future potential earnings,” the report said.

Canterbury and Marlborough, which have been dealing with drought, had the biggest drop in sheep numbers at 12.2%.

Flock reductions

Flock reductions of 30-60% were common in the driest areas such as Nelson and North Canterbury and complete ewe flocks were sold in extreme cases.

In recent weeks job losses at a Waitaki meat plant have been reported when it struggled to secure enough stock and shearing gangs have less work due to lower sheep numbers.

Beef and Lamb New Zealand chair Kate Acland said with no recovery in sheep numbers in sight the effects will continue.

“The sheep and beef sector creates about $11bn in revenue for New Zealand and supports 90,000 jobs throughout farming and the processing sector and we know that sheep and beef farmers spend most of their money in their rural communities.

“So what we’re seeing is in a lot of these rural communities, is having an impact. We’re seeing reductions in vets and services, we’re seeing local schools close or lose teachers, so the flow on impact is here and it’s being felt in large parts of the country already.”

Ms Acland said a lot of sheep farmers are getting extra jobs, selling to carbon forestry or transitioning into beef farming which is currently providing better returns.

“Unfortunately, we’re not seeing anything that will signal a a sharp turn around, I mean, at Beef and Lamb we are really trying to focus on the factors that farmers can control on farm, which is really building productivity and profitability.

“But we’re concerned about the critical mass of our sector. The sheep and beef sector is an economic powerhouse for our country and it supports the biodiversity and those iconic hill country landscapes so it’s so important that we do rebuild the profitability and the confidence in our sector,” said Ms Acland.