The EU lamb price in March was up 2% m-o-m and 14% y-o-y due to diminishing supplies from New Zealand. However, weak demand in the EU is likely to keep a lid on the price in the next three months.
Chinese demand for New Zealand lamb increased amid African Swine Fever (ASF), and therefore shipments were diverted towards China in early 2020. As a result, New Zealand lamb exports to the EU were down in February. However, the trade disruption caused by the outbreak of the coronavirus had left many New Zealand ships stuck at Chinese ports. This also resulted in a surplus in the New Zealand market as there were no empty ships (returning from Chinese ports) for exports. If New Zealand lamb were to be diverted from China to Europe, the shipping time would be several weeks, which is longer than New Zealand to Europe. Considering easy geographical access, New Zealand diverted its exports to the Middle East, its largest export market. As a result, the EU market was supplied with less lamb, adding upward pressure to prices.
However, throughout Europe lamb demand at Easter is expected to be low due to the ongoing pandemic. Lamb demand from restaurants and pubs is exhausted due to the lock down but some demand is anticipated to come from home cooking. However, financial concerns raised due to the outbreak of the coronavirus is likely to keep the demand subdued, as consumers are looking for cheaper protein sources. As a result, all the above factors are expected to result in bearish price trend in the next three months.