Farm-gate lamb prices have continued to soften as the season reaches full pace, while good seasonal conditions have seen slaughter numbers lift much more slowly than normal.
By the end of January, only 6.1 million lambs had been processed to date this season, down 6% on last year and 1.3 million head down on the same time in the 2009-10 season, Rabobank's March agribusiness review showed.
Processing numbers lifted in February but Beef and Lamb New Zealand revised its original prediction lamb slaughter would reach just over 20 million lambs this season, down by 300,000 head.
Heavier weights from good seasonal conditions would continue to lift production marginally above last year's levels.
Markets would not have the higher mutton volumes to balance the light lamb supply, as occurred last season.
UK lamb wholesale prices were broadly about 10% softer than this time last year, but retail prices have held consistently through the start of 2012.
The NZD/GBP exchange rates were sitting 10% higher (year-on-year), which continued to be a challenge, with little respite in view.
As a result, average export returns were down around $NZ1 per kg on last year's final quarter, at $8.75 per kg FOB.
Export volumes post-Christmas lifted 11% month-on-month but year-on-year volumes were well down.
The combined prices and lower volumes were reducing the overall income for the industry this season.
Shortened supply of stock coming to market across New Zealand has slowed beef-processing and left export volumes down 5000 tonnes in January year-on-year (down 20% year-on-year).
Farm-gate prices continued their seasonal softening through the month but have rebounded slightly at the start of March.
In the dairy industry, favourable seasonal conditions continued to support strong milk flows and production remained well about last season's levels in most regions.
Exports reflected the higher milk flows and volumes in January were 26.5% higher than a year ago. Buying activity remained strong in China, where volumes were up 43% to 71,172 tonnes.
Uncertainty around demand from many key European markets, along with the traditional slowing in chilled venison at this time of year, has seen farm-gate prices for venison continue to fall, to under $7.50kg.
New Zealand wine export volumes increased 11.6% to 174.7 million litres in the year to January 2012.
Over the past 12 months, annual bottled wine shipment volumes have lifted 5.8% on the previous corresponding period to 113.1 million litres, while bulk wine shipments have increased 24.2% to 61.6 million litres.
In the year to December 2011, the annual value of exports grew 4.1% on the previous corresponding period to $1.135 billion.
