A rising currency won’t bode well for red meat exporters already trying to shift expensive product

Analysts warn lamb prices, well up on last year’s rates when the exchange rate is considered, may be harder for exporters to justify into the new year.

While restockers continue to dive into buying in ewes and lambs, exporters are hoping a rising Australian dollar doesn’t decrease their ability to shift product at high rates. Picture: Kate Dowler.

THE rising Australian dollar against the US currency is likely to work against lamb exports values coming into next year.

That is view of Mecardo market analyst Olivia Agar.

It comes as saleyard lamb prices continue to track above last year’s rates during the past few months and year-on-year, lamb prices were now nine per cent higher and mutton, eight per cent. The national heavy lamb indicator was steady on Monday, at 750c/kg.

But the rising Australian dollar against the US currency was likely to weaken export returns going into next year.

Ms Agar said export volumes had “held up well considering the state of economies in our key markets”, during October and into November but a decline was expected coming into January.

She said the rising Australian dollar – now trading at 74 US cents – was likely to hit export values.

Even now, trade lambs cost 19 per cent more than last year’s values in US money and mutton was 17 per cent up.

Ms Agar said Mecardo was holding off putting put price forecasts for 2021 while the global economic uncertainty continued.

Looking back at the year, however, Ms Agar said lamb had held up well to the coronavirus disruptions.

“There was a period in August when lamb and mutton fell off the back of processor shutdowns but they have rebounded well during a period when we would normally see the market falling as the spring flush comes on,” she said.

“Now, it just depends on the rainfall in the south and whether people will hold onto lambs for weight gain, or keep more ewe lambs to rebuild their flock.

“NSW are well into their spring flush but Victoria still has a lot to come.”

Ms Agar said the lamb restocker indicator was hovering around 875c/kg this week, which was 130c/kg above where it was at the same time last year.

Restocker lamb prices have been a theme throughout the year for the eastern states, with the National Restocker Lamb Indicator hitting a record of 1025c/kg cwt on 10 March, before easing in August back to 632c/kg.

Meat and Livestock Australia has reported that since the slight dip in August, restocker lamb prices have continued to rebound.

And if forecast rain was delivered along the east coast, Ms Agar said there was “no reason restockers won’t continue to show very strong interest in restockers early into next year; we have seen how the cattle market has been held up by restockers.

“We are coming off a 100-year low in the sheep flock so there is every probability the rebuild will continue.”

Meanwhile MLA analyst Stephen Bignell said sheep and lambs continued to be trucked across the Nullabor from Western Australia, as climatic conditions pushed more than 1.5 million out of that state to the east.

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