Tight supplies of lamb keeping prices steady

Relatively tight lamb supplies, particularly from New Zealand, are helping to underpin in-market lamb prices.

New Zealand's lamb crop last year was believed to be the smallest in more than 60 years.

Slow growth, due to cool and damp spring conditions, resulted in very low levels of lambs processed in October-December, although there would be some catch-up early this year, Westpac's latest Agri Update said.

Australia saw solid growth in lamb exports through the end of 2016, although poor lambing conditions would weigh on exports this year.

The demand picture remained "murky"; although demand from China for some of the cheaper sheepmeat cuts had been more positive recently, the implications of Brexit were already creating challenges in the UK market, the report said.

The substantially weaker pound has eroded the competitiveness of New Zealand's lamb exports, making exports more expensive and UK lamb exports to Europe cheaper. Further out, market access was uncertain.

Alliance Group general manager livestock and shareholder services Heather Stacy said most farmers had surplus feed and were in the position to carry lambs on, which was putting some pressure on the business in terms of volumes.

It was the middle of chilled contracts for lamb and trying to get the flow of lambs to process was a day-to-day issue at the moment, she said.

Obviously, lambs would come through and it was likely there would be "a bit of a bow-wave" in a couple of weeks' time.

Ms Stacy saw prices "sitting around where they are" for the short-term, which was a reflection of market demand and livestock supply.

She had been visiting farmers recently and found them positive, despite the seasonal challenges, she said.

There was some flock rebuilding, coming out of drought, which was also putting pressure on volumes, she said.