Lamb prices surge as supply shortages boost market optimism, Deer velvet market reels from Chinese stockpiling shock, and outdoor fire restrictions implemented across Otago.

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Lamb prices surge as supply shortages boost market optimism

New Zealand's sheepmeat sector is showing promising signs of recovery, with market data revealing encouraging trends. Slaughter prices have climbed approximately $1.50 per kilogram compared to last year, offering a welcome boost to farmers battling recent market challenges.

The Meat Industry Association's latest figures highlight a turning point, with China returning as New Zealand's primary red meat export destination in October. Total exports reached $662 million, marking a 7% increase from last year, with $170 million directed to Chinese markets.

Alliance Group's global sales director James McWilliam says market dynamics are driving this improvement. Early-season price increases stem from global supply shortages, strategically timed around Christmas production and Chinese New Year. Notably, this year’s flooding in Southland has created procurement tension, with the South Island lamb kill running well behind last year's levels.

North Island lambs are currently fetching around $8.10 per kilogram at carcass weight, a substantial jump from $6.35 last year. South Island prices mirror this trend, sitting at $8.06 per kilogram compared to $6.40 Last year.

Mutton markets are also experiencing uplift. North Island mutton prices have risen from $2.65 to $4.20 per kilogram, with South Island prices climbing from $2.35 to $4 per kilogram. 

Export pricing shows similar positive movements. China lamb flaps have increased to $10.13 per kilogram, up from $8.59 last year. While exports to China have temporarily dipped, Meat Industry Association Chief Executive Sirma Karapeeva sees promising green shoots, suggesting lamb prices have likely bottomed out.

Deer velvet market reels from Chinese stockpiling shock

While the sheepmeat sector is bouncing back, deer velvet farmers are confronting a challenging season, with prices plummeting 20 percent below last year's levels, pushing some producers to the brink of financial strain.

The industry's rollercoaster journey began when China unexpectedly changed import requirements, temporarily blocking New Zealand's frozen velvet exports. After intense negotiations between industry and government officials, market access was restored in October.

However, the rapid resolution created an unexpected market complication. Deer Industry New Zealand chief executive Rhys Griffiths explains a significant Chinese buyer had stockpiled velvet, anticipating prolonged export difficulties. When access was swiftly restored, this buyer began offloading excess stock, dramatically flooding the market.

Some producers are now facing prices below production costs, forcing difficult decisions. While some companies continue selling at reduced rates, others are strategically holding inventory, waiting for market recovery. Some are choosing to store velvet in freezers, hoping for market stabilization.

Despite current challenges, industry leadership remains cautiously optimistic. Griffiths emphasized strong underlying demand in key markets like China and South Korea. Retail consumption of New Zealand velvet remains robust, suggesting the current downturn may be temporary.

Water restrictions in Southland despite record rainfall

Southland farmers are facing an unexpected water management challenge as the district council introduces water restrictions, despite experiencing the wettest spring on record. The move comes in response to Niwa's seasonal climate predictions, which forecast an unusually warm and potentially dry summer ahead.

The Southland District Council has activated stage one water restrictions, aiming to preemptively manage water resources. While September and October rainfall totals were the highest on record – with northern Southland recording 188% of long-term averages – the outlook for the coming months suggests a dramatic shift. Niwa predicts temperatures well above normal, with increased likelihood of days exceeding 25 degrees Celsius.

December has already trended drier than average, with potential development of a weak La Niña pattern that could bring significant variability. The forecast suggests more northeasterly winds, potentially creating extended dry spells and challenging conditions for local agriculture.

Jason Herrick, Southland Federated Farmers president, is perplexed by the restrictions. Having just weathered an exceptionally wet spring, farmers are struggling to reconcile the current water conservation measures with recent environmental conditions.

Farmers are advised to monitor local conditions closely and prepare for potential water scarcity in the coming months, despite the recent abundance of rainfall.

Southland dairy farmers increase compliance rates

Meanwhile Environment Southland has issued 40 infringement notices across various sectors this year, with the most significant compliance challenges emerging across multiple industries. The notices span agricultural, coastal, electricity generation, and water abstraction sectors.

Winter grazing practices resulted in two confirmed breaches out of 11 complaints. Whitebait stand operators faced scrutiny for improper identification and maintenance, while some industrial consent holders struggled with site-specific environmental conditions.

Environment Southland chairman Nicol Horrell emphasized the nuanced nature of these infringements, noting that many consents involve complex and unique processes. The council has implemented an education-first approach, introducing a 24-hour notice system for dairy discharge consent inspections to foster more constructive conversations between regulators and land managers.

The dairy sector inspection results tell a particularly compelling story. Of 783 discharge consent inspections, 66% were fully compliant, with only 1% showing significant non-compliance – a dramatic improvement from the previous year's 3%. Twenty-five percent demonstrated low-risk non-compliance, and 8% showed moderate issues.

While infringement notices increased slightly from 33 to 40, abatement notices dropped significantly from 60 to 30. 

The council's monitoring spans an extensive range of sectors, including agriculture, coastal and marine environments, electricity generation, forestry, and water abstraction.

Outdoor fire restrictions implemented across Otago

Fire and Emergency New Zealand has implemented fire restrictions across parts of Otago, prohibiting outdoor fires and fireworks in Central Otago, Naseby, and upper Waitaki regions effective immediately.

Otago District Manager Phil Marsh says the decision stems from strong north-westerly winds and minimal rainfall throughout November, which have created extremely dry conditions across the region. The combination of grassland valleys, scrubby hillsides, and exotic forests presents heightened fire risk.

No open fires are permitted, and all fire permits have been suspended. Wind conditions have further complicated fire containment, with some incidents escalating quickly due to winds reigniting old burn piles and spreading to surrounding vegetation.

While Central Otago, Naseby, and upper Waitaki face complete fire bans, other Otago regions remain in an open fire season. However, coastal Waitaki, Strath Taieri, and Queenstown Lakes are expected to transition to restricted fire seasons by the end of the week.