Confidence Returns to Sheep and Beef
There’s a renewed sense of optimism across New Zealand’s sheep and beef sector this spring, and for good reason. Prices are climbing across the board, margins are healthy and the global appetite for red meat shows no sign of slowing. After years of volatility and weather disruptions, producers are heading into summer with a genuine tailwind behind them.
Lamb and Beef prices are now sitting at record highs, driven by strong demand and tight supply both here and overseas. In the United States, where inventories are low and herd rebuilding is still some way off, prices have surged. Even with Brazil sidelined by a 50 percent tariff and New Zealand beef facing its own 15 percent import tariff, returns to local farmers remain strong. As ANZ notes, “most of these price hikes are making it back to New Zealand farm gates.” China too is proving resilient, taking larger volumes of beef as Brazil redirects trade flows away from the US. Despite a sluggish Chinese economy, demand for imported red meat remains firm a sign of just how deeply New Zealand beef has embedded itself in that market.
Closer to home, Beef + Lamb New Zealand’s new season outlook puts total beef production down just 1.4 percent for 2025/26, reflecting a small reshuffle between cow and heifer classes rather than a structural decline. Dairy restocking trends have shifted, but the national breeding base for beef is slowly expanding. The proportion of dairy-origin beef continues to grow, a positive sign of how integration between sectors is strengthening national supply. ANZ expects production to increase in coming years as more beef-breeding cows are retained and dairy beef utilisation rises.
Lamb and mutton are also enjoying a stellar run. Farmgate lamb prices have climbed steadily through spring and are forecast to average $9.65 a kilo – up more than a dollar on last season. Supplies are tight in both New Zealand and Australia and strong in-market prices in Europe and China suggest that while consumers may begin to resist further increases, there’s little sign of demand collapse. Even with a likely seasonal easing early in the new year, prices are expected to hold at historically elevated levels.
Mutton prices tell a similar story. With fewer adult sheep on hand and a stronger outlook for both meat and wool encouraging flock retention, the forecast for the year sits around $5.25 a kilo. High returns are keeping numbers stable and confidence high across the industry. Farmers on both sides of the Tasman appear inclined to rebuild flocks while conditions allow, rather than cash in and sell down.
Wool, too, has added an unexpected layer of good news. The strong-wool indicator recently surged past $4 a kilo clean – the first time it’s done so since 2016 – with merino prices also lifting sharply in both New Zealand and Australia. Shrinking supply, firm end-user demand and an overdue correction in global stocks have all contributed to the rally. While some volatility is inevitable, the direction of travel is unmistakably upwards. For growers who have endured years of depressed prices, the sight of bales commanding real value again is a morale boost that cannot be overstated.
These buoyant returns are feeding directly into on-farm confidence. After a tough stretch of high costs and fluctuating markets, sheep and beef operations are finally enjoying strong gross margins and the prospect of another profitable season. Lower interest rates, a weaker New Zealand dollar and supportive pasture growth are adding further momentum. According to ANZ, “there are no shortage of reasons for optimism.”
It’s a far cry from the uncertainty that has clouded the sector in recent years. Policy changes, extreme weather and market shocks have all tested resilience, yet the fundamentals of grass-based meat production remain rock solid. New Zealand’s reputation for natural, low-input farming continues to underpin demand and the sector’s discipline in adapting to global trends – from sustainability standards to animal welfare expectations is paying dividends.
The outlook for the year ahead is about as bright as it gets. Global supply constraints, particularly in the US and Australia, are likely to persist through 2026 while demand for premium protein remains robust across Asia and Europe. Farmers are mindful that high prices can’t last forever, but for now, strong returns and softening finance costs are delivering some well-earned breathing space.
After seasons of mixed fortunes, the sheep and beef sector has found its stride. It’s proof once again that when markets stabilise and policy settings give farmers the freedom to focus on production, New Zealand agriculture responds with world-class performance. For those on the land, it’s not just a good yarn it’s a well-earned one.