2019: the year of the Sheep

Auspiciously, 2019 was the ‘Year of the Pig’. As it turns out though, African Swine Fever meant that pigs were few and far between this year. For NZ farmers, this meant that 2019 quickly turned into the ‘Year of the Sheep’, with sheepmeat prices reaching unprecedented levels. Beef prices also set fresh record highs, while fruit prices also boomed. With the milk price joining the party in the second half of the year, 2019 has generally been a stellar year for farmers on the commodity price front.

At the start of the year, it was a stretch to imagine lamb prices topping the record highs of spring 2018. But top them they did! In fact, spurred on by African Swine Fever, lamb prices hit as high as $9.00/kg this year. Beef prices weren’t far behind as they also surpassed the previous record highs.

Meanwhile, 2019 has been another banner year for fruit exports. After cracking $3 billion in exports for the first time over 2018, fruit exports are set for another leg up to around $3.4 billion over 2019. The kiwifruit sector or more precisely gold kiwifruit exports have been doing much of the fruit industry’s heavy lifting.

On the whole, 2019 has been a good year for the milk price. While the 2018/19 season delivered a modest $6.35/kg milk price, the second half of 2019 saw the milk price hit the ground running. Indeed, we end the year with a bullish $7.50/kg forecast for 2019/20 in place.

Turning to financial markets, 2019 has seen interest rates tumble to record lows. However, while we expect benchmark rates to remain very low, we may be past the absolute lows in lending or customer rates.

The NZ dollar has also been a ‘star’ over 2019. As seen in the chart below, the relatively weak NZ dollar has helped boost farmgate prices in NZD terms.

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Nathan Penny

Senior Rural Economist

Nathan's bold predictions and his ability to call it as he sees it sets him apart from other New Zealand rural economists.  In particular, his controversial, but ultimately successful $6.00/kg MS 2016/17 milk price forecast is case in point.

He has a natural talent to distil complex issues and translate them into user-friendly formats for diverse groups, including farmers and financial markets participants.  Nathan brings unique perspectives and thought leadership to the country's rural and broader export sectors.  

Nathan joined ASB as the Rural Economist in 2013, having cut his teeth at the New Zealand Treasury.  He hails from the Kapiti Coast and studied at Massey University where he graduated with a Master of Applied Economics.

Nathan's expertise lie in dairy and other commodity markets, trade economics and economic forecasting.  He's a leading GlobalDairyTrade auction and NZX dairy derivatives commentator and he also authors ASB's monthly rural publication, Farmshed Economics.  

He's a proud Hurricanes and Wellington Phoenix fan, and will gladly discuss at length the Hurricanes Super Rugby 2016 victory.

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