Possible signs of better times ahead?
The latest ASB quarterly report suggests a more positive outlook for the primary sector compared with previous quarters.
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.”
Federated Farmers claims that the Otago Regional Council is charging ahead unnecessarily with piling more regulation on rural communities.
Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.
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