New Zealand lamb exporters are eschewing the weak UK market in favour of other more lucrative trading destinations, pushing the volume of meat sent to what was once the nation's biggest export market to a record low last month, AgriHQ says.
"The UK lamb market is slowly becoming less pivotal to NZ exporters," AgriHQ analyst Reece Brick said in his monthly Sheep & Beef report. "A steady decline in lamb consumption combined with a loss of economic confidence following Brexit has resulted in a challenging market environment. Exporters have largely chosen to divert their product to higher-paying markets, and this will be a strategy that increases over time."
Just 1,274 tonnes of frozen lamb made its way to the UK from New Zealand in August, the lowest monthly volume since AgriHQ records began in December 2006. Across the months of July and August NZ frozen lamb exports to the UK were down 32 per cent on a year ago and were 38 per cent behind the five-year average, AgriHQ said.
Similarly, NZ lamb exports to continental Europe fell 11 per cent to 2,946 tonnes in August, the lowest level for the month since AgriHQ records began in 2006, and 22 per cent behind the five-year average.
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New Zealand exporters have focused on the chilled trade to the UK, which is still achieving very solid prices, Brick said. Prices for chilled lamb for the Christmas trade is expected to be ahead of last year as customers seek to secure product following scarcity of supply last year, he said.
Brick said prices in the UK and continental Europe are likely to adjust as supply from New Zealand increases and production reverts to frozen, but will still remain at historically high levels.