Rural Watch

Week beginning September 7, 2009
Monday, 7 September 2009

 Rural Watch

Week beginning September 7, 2009


Lamb

Export market prices remain steady, as market activity remains low.

NZX Agrifax revised its 2008/09 season estimate of lamb numbers up last week to just over 22 million. Lamb estimates have crept up over the season, with most adjustments coming from the greater than anticipated numbers continuing to come out of the North Island.

Original estimates at the start of the season from Meat and Wool New Zealand suggested around 8.5 million lambs to be slaughtered in the North Island. So far around one million more lambs have been processed in the North Island than expected. The South Island looks on track to meet NZX Agrifax’s prediction of slightly over 12.1 million for the season.

Schedule prices in the North Island eased off nearly $3 per head over August. However, the first two weeks of September have already witnessed around $1 of that reclaimed with a 17.5kg lamb in the North Island fetching around $103/head. South Island prices continue to remain flat, at around $105/head for a 17.5kg lamb.


Beef

Last week was a continuation of previous weeks, with the market very quiet due to little trading being done. This has meant prices for US imported bull and cow have remained unchanged at US140c/lb and US128c/lb respectively.

Asian markets continue to show no significant enthusiasm for New Zealand exporters’ product either, though the interest in cheaper cuts such as bull strip loins remains prevalent within these markets.

Unfortunately, with US imported beef prices not showing the firmness they normally do during the start of September, they look to be dampening any solid movement in farmgate prices. Over the last 10 years, farmgate prices for manufacturing cow have risen on average 5.5% from the start of August through to the second week of September. This season, we have seen farmgate prices ease just over 1% for the same period.

The average farmgate price for New Zealand manufacturing cow looks to have already peaked this season in mid-August at 239c/kg, with this weeks prices having eased further, to average 233c/kg.


Wool

Wool prices in the past month have remained steady, despite the rising New Zealand Dollar. New Zealand’s trade weighted index has risen 4.4% in the past month while the New Zealand wool prices rose by an average of 2%. This is beginning to show a similar trend to what was happening in 2007 prior to the recession, where wool prices appeared to be lead by a rising exchange rate.

Now that stocks are down, buyers of New Zealand wool are looking just to fill their immediate requirements, with only short term buying occurring. With this pattern, it will not be surprising to see short term spikes and troughs in future prices.
China continues to be the main destination of New Zealand Wool. According to Statistics New Zealand overseas trade figures, China took 37% of total raw wool exports in the month of July and 48% of the exports for the 2009 calendar year to date, totalling 77,000 tonnes. The European Union countries of the United Kingdom, Italy and Belgium received 27% of the July exports, while India was steady at around 10%.

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