Meat exporters hit by falling prices and high dollar

DUNEDIN - Export lamb prices have fallen sharply and meat companies warn they could fall further with a firming of the exchange rates.

Lamb has fallen about 15 cents a kilogram a week in recent weeks and pelts have fallen $1 in each of the past two weeks, caught between the traditional removal of early season premium prices, some price resistance in markets and the euro and pound strengthening in value against the New Zealand dollar.

A year ago, 15.5kg lambs were worth $60 a head compared to $54 this week, while 17.5kg lambs were worth $68 a year ago compared to $62.

The fall in the lamb schedule could cost a farmer selling 2500 prime lambs about $14,000 at current prices.

Venison, already selling at prices many farmers consider uneconomic, have also been hit, with prices to farmers this year of between 378c/kg to 400c/kg compared to 388c/kg-410c/kg at the same time last year.

Prices have fallen by up to 10c/kg over the past week, according to published schedules.

A mixture of oversupply and weak markets has seen venison prices stall around $4/kg for the past two years and the strong euro is compounding problems.

"All venison is sold in euros and a significant majority of lamb is sold in euros and the pound," PPCS chief operating officer Keith Cooper said.

Alliance chief executive Grant Cuff said the last time all three major currencies in which sheep meat was sold - the euro, pound and US dollar - were at these levels was 1997.

He saw it as the major influence for sheep meat prices, and a total turn around from October when the Invercargill meat company was planning for the current season and predicted exchange rates to ease.

Cuff said the influence on the market of the exchange rate was such that the company was not advising farmers on what to pay for store lambs bought now to be killed in the new year.

Lamb pelt prices have continued to ease as they did last season due to retailing changes which have removed the premium paid for the fashion item.

Cooper said: "We have always said the market wanted 15.5kg to 17kg, that is their ideal lamb. Recently, there has been a big block of product averaging 19.8kg and the market does not want that at premium prices."

- NZPA