Red meat farmers are set to get good returns this year, as beef and lamb markets remain strong amid global uncertainty.
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Westpac is forecasting farmgate beef and mutton prices to hit $7/kg and the farmgate lamb price to exceed $10/kg this season.
Senior agri-economist Nathan Penny said despite global uncertainty in the red meat market, with major destocking in the US, strict Covid-19 measures in China and the war in Ukraine - things were still looking up for farmers here.
"When you cut through all that noise, the main things that we're focusing on is that meat processing capacity is getting back to closer to normal after the Covid-19 outbreak, or the Omicron outbreak that we had earlier in the year, that was putting the squeeze on processing capacity with lots of workers away.
"That's the first thing. The second thing is that we're seeing falling shipping costs globally, and that's helping meat companies get their product to market much cheaper than it was earlier in the year.
"And the last thing, is the New Zealand dollar is playing ball. It's weak, and that's supporting farmgate prices as well.
"So those things coming together, we think they're the key things over the next few months that should underpin, or even boost, farmgate prices."
Penny said despite higher farmgate prices, farmers were dealing with inflation and higher input costs.
He said there was still some uncertainty in the market.
"We have emphasised in this report that uncertainty is still a key theme of all these markets, including meat.
"Therefore, the market outlook isn't as clear as it was, say six months ago, and there's a wider range of possibilities than there was back then as well.
"What could happen and what could keep prices lower than we expect, well the drought in the United States, and the very high levels of destocking that's going on as farmers, essentially, aren't making making much money, so they're having to slaughter their capital stock, or their breeding stock.
"But also, we don't know for sure that China is going to come out of its Covid lockdowns and we don't know for sure that Covid restrictions will ease and that China will rebound in the second half of this year.
"And lastly, we also don't know how bad the global economy is going to get. So there are uncertainties, which mean there's a wider range around our forecasts than normal.
"But putting that all aside, we're still pretty bullish, and we think it's going to be a good season on the price side farmers."
Penny said red meat prices typically peaked in October.