Lamb flap prices jumped to their highest level in a year and a half, driven by increased demand from China where buyers are stocking up for New Year celebrations.
The price for lamb flaps rose to US$4.70 per kilogram in October, up from US$4.50/kg in September and US$3.80/kg for the same period a year earlier, according to AgriHQ's latest monthly sheep & beef report. That's the highest level recorded by AgriHQ's since April 2015.
Lamb flaps are popular in China for use in traditional hotpot dishes, and traders are buying the meat now to ensure it can be shipped to China in time for New Years celebrations starting in late January and to cover demand for the ensuing holiday period.
Also known as the 'spring festival', the Chinese New Year falls on Jan. 28 in 2017, ahead of 2016 when it was celebrated Feb. 8.
"The earlier than usual Chinese New Year is underpinning the market, pushing prices to a positive level for this point in the year," AgriHQ analysts Reece Brick and Shaye Lee said in their report.
Meanwhile, the benchmark price of a leg of lamb in the UK gained to 4.35 British pounds/kg in October from 4.20 pounds/kg in September and 3.40 pounds/kg a year earlier.
However AgriHQ said the weaker UK currency since the Brexit vote is damaging returns for New Zealand exporters, with the kiwi currency 37 percent higher than this time last year.
"The UK lamb market appears increasingly likely to cause issues for New Zealand exporters in the coming months," the analysts said in their report. "UK buyers have shown little to indicate they will absorb the eventual increase in volumes as new season production increase without some downwards movement in prices."
The price for US imported 95CL bull beef, the raw ingredient for meat patties, edged up to US$2.10 a pound, from US$2.02/lb the previous month and US$2.09/lb a year earlier.
However, the analysts said there is little confidence that the lift will be sustained in coming weeks.
Meat is New Zealand's second-largest commodity export product behind dairy, and was worth $6.24 billion in the year through September, according to data published by Statistics New Zealand.