New Zealand sheepmeat producers can expect to continue to enjoy high prices and favourable offshore market conditions in the year ahead, according to Voxy.co.nz.
The report, citing Robobank’s Global Focus research, says substantial lift in 2011 farm gate prices brought the country's sheepmeat producers a level of buoyancy not seen for nearly a decade.
Report author, Rabobank analyst Rebecca Redmond says as the "fairytale 2010/2011 season" draws to a close, the future continues to look bright.
Redmond was quoted saying even at higher prices, overall demand for New Zealand sheepmeat has been holding steady in developed markets.
"Although some consumers are struggling to pay the higher prices, there are those that continue to enjoy lamb and the lift in revenue is balancing the fall in consumption," she said.
Rabobank expects demand for sheepmeat to soften slightly in developed markets and ultimately limit further upside in the current retail pricing while economic conditions remain soft.
Redmond says the neutral outlook in developed markets is balanced by emerging market demand, such as China, which is expected to lift with income growth and the modernisation of supply chains in the retail and food service sectors.
The Rabobank report says a decade of shortening of supply from key sheepmeat exporters including New Zealand, Australia and the United Kingdom, along with a decline in the world's biggest domestic flock in China, reflect the changing dynamic around sheepmeat production.
Redmond says high prices are driven by limited global supply.
Increasing affluence has also contributed to an increase in demand for meat, including sheepmeat, according to Redmond says. Coupled with declining domestic production in China, imports have been lifting in volume and value to this region.
"In 2010 a Chinese consumer in the top 20% of the income bracket consumed 1.5kg of sheepmeat per year, while a consumer in the bottom 20% of the income bracket consumed one kilogram of sheepmeat on average. Lifting income levels has the potential to increase sheepmeat consumption by 50%."
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