In-market prices for lamb and beef are expected to remain solid in the coming year, and exchange rates are likely to have the greatest impact on farm-gate returns, according to M&WNZ's New Season Outlook for 2009-10. M&W Economic Service Executive Director, Rob Davison says despite the weakened global economy, the good retail and wholesale lamb prices achieved in the last year look set to remain though the recession places a ceiling on beef prices, especially in the North Asia and European markets. There may be slight firming of in-market wool prices, which saw a significant drop last year, particularly for medium and fine wool. Mr Davison says uncertainty in the global economy, and the timing and strength of New Zealand's economic recovery make it extremely difficult to forecast where the New Zealand dollar will go over the next year and how farm-gate returns will be affected. Because of the likely short-term exchange rate volatility and its effect on farm-gate prices and farm profit, we have looked at several exchange rate scenarios in 2009-10." "Based on an optimistic exchange rate "˜mid-point' for the year of 63 cents/US dollar, up 8 per cent on last year, the forecast per head lamb price of $80 is down 10 per cent on 2008-09's seven-year high of $89. Beef prices would be expected to be down 11.7 per cent based on the mid-point exchange rate. "A higher exchange rate for 2009-10 centred around 67 cents/US dollar and its associated cross rates would see beef prices compared with last year drop 17.1 per cent and lamb prices drop to $73 per head (-18%)."
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