Chinese buyers were well stocked heading into their summer and now have limited appetite to purchase as inventories are building.
Ramadan ran through much of June and was a key reason behind the lower demand in the Middle East, where inventories have also slowly built up. Frozen lamb sales into the UK stalled on the seasonal lift in UK domestic lamb production.
Still, the rising prices and favourable currency movements translated into the second highest average export value for frozen lamb in a May month, AgriHQ said.
At $8.21/kg it was 26 per cent higher than in May 2016 and only beaten by $8.88/kg in 2011. The average value of chilled lamb was $13.97/kg, up 17 per cent on the year but trailing the $15.06/kg achieved in May 2011.
The monthly report shows benchmark prices in June for several meat cuts remained well above the level they were a year earlier.
The benchmark price for a frozen leg of lamb in the UK fell to 4.65 British pounds/kg in June from 5 British pounds/kg in May but was well above 3.80 British pounds/kg a year earlier. In the European Union, the benchmark was 5.90 euro/kg, unchanged from May but higher than 5.40 euro/kg a year earlier.
For frozen french lamb racks, the benchmark price in the US rose to US$8.65/pound from US$8.60/pound in May and US$6.80/pound a year earlier. In Europe, the benchmark was 17.25 euro/kg, unchanged from May and up from 13.50 euro/kg a year earlier.
The price for a five-rib forequarter eased to US$5.10/kg, from US$5.35/kg in April and US$4.20/kg a year earlier.
Meanwhile, competitive pressures drove up lamb slaughter prices up in June, in particular on the South Island, and farmers say there is more upside to come,
Procurement competition for lambs lifted sharply through June and "processors readily dug deep into their margins in order to stay competitive within the market," AgriHQ said.
This was particularly noticeable on the South Island where slaughter prices lifted 40c/kg, or 7 per cent, in June, temporarily placing the South Island market slightly above the North Island for the first time in more than a decade.
North Island prices rose 35c/kg in the same period. The national net per head and weighted average price was $6.55/kg in June versus $6.33/kg in May and $5.23/kg a year earlier. Farmers are anticipating slaughter prices will rise another 40c-50c/kg by the end of the season, AgriHQ said.
The lamb slaughter has tracked on par with what is common for this point in the year. Data in the four weeks to June 10 put the national lamb kill at 1.48 million lambs, up 12 per cent on the year but nearly identical to the five-year average.
AgriHQ also noted that total production volumes are being somewhat inflated by heavier than typical carcass weights. Both the larger kill numbers and the heavier carcass weight come from farmers sending lambs to slaughter later than normal after impressive autumn and early winter feed conditions.
