Friday, 18 January 2019 12:21

Lamb prices running out of steam

Written by 
Nathan Penny. Nathan Penny.

The gap is closing between 2019 season and 2018 season prices, says ASB senior rural economist Nathan Penny.

In his weekly commodities report, Penny noted that the last 18 months or so have been stellar for lamb prices.

But lamb prices, so far over 2019, are hinting that they are running out of steam, he says.

Lamb prices opened 2019 at $7.20/kg, some 45c/kg lower than where they ended 2018. From the peak price of $8.43/kg back in September, the per kg price has now fallen $1.23/kg (or around 15%).

“This fall is a little more than we expected at this stage,” says Penny.

“The average fall over the past five years from the spring peak to autumn low is around $1.20kg. In other words, the fall to date has already exceeded the average fall with another two or so months before prices usually bottom out.

“Still at $7.20/kg, lamb prices remain healthy. Nonetheless, the steepness of the recent fall warrants a wary eye on lamb prices over the next month or two. In particular, we will be monitoring closely how Chinese lamb demand develops given the broader slowing in the Chinese economy.”

 

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Banks are mainly holding firm on their forecasts of $7/kgMS despite last week’s flat Global Dairy Trade result – a small decline of 0.4% in the overall price index.

$8 lamb on the cards

Sheep farmers are in for another year of solid returns, says ASB’s senior rural economist Nathan Penny.

$7 payout still on the cards

Economists are still sticking to a 2019/20 season forecast of around $7/kgMS despite the 3.8% drop in the Global Dairy Trade overall price index last week.

 
 

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