Beef, lamb and mutton prices are expected to remain at historically high levels for the second season in a row, Beef and Lamb NZ said.

The farmer-funded organisation, in its outlook for the 2018-19 export season, said the beef and lamb exports would each break through $3 billion in export sales for the period, supported by a weaker kiwi dollar and strong export demand.

"We forecast slight increases in farm-gate prices for lamb and mutton in 2018-19, as prices are expected to remain relatively steady in New Zealand's main export markets and benefit from an expected easing of the New Zealand dollar," Beef and Lamb chief economist Andrew Burtt said.

He said that while there is potential for international sheepmeat and beef trade to be disrupted in 2018-19 because of geopolitical uncertainty, large-scale droughts, and disease outbreaks in competing animal proteins, the outlook for New Zealand's sector was positive.

Advertisement

He added the sharp fall in the kiwi dollar has had a large bearing on the sector's outlook. "The New Zealand dollar is expected to ease as the economies of our major trading partners strengthen in 2018-19 - principally against the US dollar in which over 70 per cent of red meat exports are traded," Burtt said.

A combination of tighter mutton supply from Australia and New Zealand, who contribute the majority of international sheepmeat trade, and growing global demand is expected to continue to drive an increase in the average export value of mutton, which influences lamb prices.

China's demand for red meat from all sources is expected to continue to grow, but demand for lamb, mutton, and beef is also expected to remain strong in all New Zealand's major red meat export markets.

New Zealand's export lamb production is forecast to decrease by 1.7 per cent in 2018-19 due to a smaller lamb crop, as the result of a fall in the number of breeding ewes this year as farmers took advantage of high mutton prices.

New Zealand's beef cattle herd grew by 1.9 per cent to 3.68 million head at June 30, 2018, the second small increase in a row after declining steadily since the 1990s.

Sustained strong cattle prices, and the lower labour requirement associated with cattle, has encouraged farmers to maintain or lift herd sizes, particularly in the South Island.

As a result of all these factors, total lamb exports are estimated to remain at around $3.1b in 2018-19, after breaking the $3b mark for the first time in the 2017-18 season.

Beef exports are forecast to be around $3.4b in 2018-19, a 4 per cent decrease on 2017-18.

Farm expenditure for 2018-19 is forecast to increase overall, but revenue is also expected to increase, driven by a lift in farm-gate prices which are expected to increase revenue from sheep, wool, and cash crops, Burtt said.