Farm-gate lamb prices continued to rise over the last month but at a subdued pace, as domestic supply tightened through winter.
As of early July, the slaughter price in the North Island averaged $6.65kg carcass weight while South Island lamb averaged $6.50, Rabobank's Agribusiness Monthly said.
For the North Island, that was up 4% month-on-month and 24% year-on-year, while South Island prices were up 2% and 27% respectively.
The number of lambs processed in May increased significantly, about 10%, compared to the same month last year. However, the cumulative season-to-date lamb kill was down 6%.
Mutton prices continued to strengthen over the last month, up 4% month-on-month, and were now up almost 70% year-on-year.
There were signs in-market prices for some cuts might have peaked. Wholesale prices for UK legs dropped 7% over June. French rack prices remained stable, with a 1% increase, the report said.
As processors started to reduce capacity to match reduced supply, procurement pressures eased and the New Zealand dollar continued to strengthen, Rabobank expected only marginal lifts in schedule prices over the next month.
Last month, the first export consignment of chilled meat left New Zealand for China as part of a six-month trial.
It marked a "significant step" towards enabling permanent access. It was predicted chilled meat exports into China could receive a premium of up to 60% over frozen meat exports.
Silver Fern Farms' latest supplier update said customers in the United States were still showing strong demand for lamb and pricing for lamb was approaching historic highs for certain frozen cuts.
The UK wholesale leg market continued to ease as domestic supply increased and pricing was meeting some importer resistance.
ASB's latest Commodities Weekly said lamb prices over June and July had only ever been higher in 2011.