Beef prices hit new highs

The traditional summer barbecue has suddenly become a more expensive proposition with beef prices hitting new highs, due mostly due to a supply shortage in the United States.

ASB Bank's Beef Index has set a new record in each of the last five weeks. By the end of last week, the index was 5 per cent higher than the previous peak in September 2008, and with no sign of the firming trend abating.

"The main dynamic in play is the remarkably tight US beef market, with the US beef herd at record lows," ASB said.

The US Department of Agriculture has said it may not be until 2017 before US beef production expands again after the 2010-12 drought decimated herd numbers.

"From here it would be ambitious to expect further large price increases as consumer resistance to high prices is likely to kick in," ASB Bank said.

"Instead, we expect beef prices to bubble around their current high levels for this season and into next," ASB Bank said.

Andrew Murray, who owns The Milford Butcher on Auckland's North Shore, said prices generally firmed around this time of year because of seasonal supply constraints, just as demand started to pick up as people dusted off their barbecues following the change to daylight saving.

"There have been increases of $2 to $3 a kilo across the whole steak department over the four weeks," Murray said.

"With my supplier, I have not been able to get everything that I wanted, because they just haven't had it," he said.

Quality sirloin steak now retails for $32.95 a kg from just under $30 kg four weeks ago.

Murray said retail lamb prices were stronger, also by about $3 to $4 a kg, just before spring lamb comes on to the market. A leg of lamb retails for about $50.

ASB said that while export lamb price increases continued to slow, the depreciating New Zealand dollar was helping to support farmer returns.

Stronger beef and lamb prices have helped to offset the effects of a near 50 per cent fall in milk powder prices since February.

According to Beef and Lamb NZ, meat exports defied the effects of a very strong Kiwi dollar to reach a record high of $5.3 billion in 2013-14, driven by high average values.

Beef and Lamb said the year to September 30 was a positive one for beef, veal, lamb and mutton, with exports up by $480 million on the previous season's.

 

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