Rural Watch

Week beginning September 28, 2009
Monday, 28 September 2009

Rural Watch

Week beginning September 28, 2009


Lamb

Export prices eased a little last week, due almost solely to the recent exchange rate movements taking effect. The exchange rate with the British pound continues to break records, the latest being that it has hit a 12 year high of 44.6p against the New Zealand Dollar. More speculation of further money being pushed into the UK economy is the likely cause of this reduction in the pound’s value. Meanwhile the Euro, at 48.8 cents, is climbing towards its five year average of 51.4 cents.

The average UK retail price of a frozen New Zealand lamb leg is £6.10/kg and has remained unchanged since early July, while export prices have reduced by 5%.

A favourable winter in the South Island has seen a rise in lamb kill numbers in the past two weeks. Many lambs in this region have hit maximum kill weights for export markets and are being off-loaded in order to avoid reductions in value when overweight.

This influx has seen schedule prices in the South Island reduce further to be just under $100 for a 17.5kg lamb. In the North Island prices eased a little less, to be at $100 for the same lamb. High volumes of heavy lambs also passed through the South Island prime sales during the week, with prices easing. A medium prime lamb averaged $112, while in the North Island the same lamb sold for an average price of $106.


Beef

The US imported cow price remains unmoved at US132c/lb for the third straight week, with the imported market continuing to look soft, due to weak demand globally, combined with a cheap and healthy supply of US domestic product.

Imported prices appear to only be held up by the minimal supply on offer to the market. However, despite the depressed state of the market the US imported average cow price of US131c/lb for September 2009 is above the average prices of September 2005, 2006, and 2007 of US129c/lb, US128c/lb and US129c/lb respectively. However, it is well down on the average of US164c/lb for September 2008.

US Imported bull prices have been given some support due to US domestic 50cl beef prices tumbling below the US50c/lb mark - last week saw it settle around US46c/lb. The cheap US domestic beef is helping to support the US imported bull price, which is needed to blend with the US domestic beef for beef patties. US imported bull is currently holding at US142c/lb.

Excellent spring rain in the past week failed to prevent significant reductions in schedules, with prices lowering a further 5c/kg to 15c/kg across both islands.


Dairy

Skimmilk powder and wholemilk powder both remained unchanged at US$2525/tonne and US$2900/tonne respectively last week, as the next Fonterra gDT auction is now less than two weeks away. Butter also remained flat at US$2500/tonne.

Cheddar had a mild move of US$25/tonne, from US$3050/tonne to US$3075/tonne.

Casein was the biggest mover of the week as it gained a further 4% to bring it within $50/tonne of US$7000/tonne, now at US$6950/tonne.

Commodity gains last week have meant the NZX Agrifax weighted average dairy commodity price is now around the level it was in mid November 2008 at US$3150/tonne.

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