'Bullish' outlook for export beef

New Zealand export beef production is forecast to lift 3% in the 2011-12 season to 588,000 tonnes, of which 70% will come from prime cattle production, Rabobank's latest beef quarterly says.

Carcass weights were also forecast to lift 1.4% this season, based on improved pasture conditions.

While elevated currencies, global economic uncertainty and climate risks might pose short-term obstacles for global beef markets, the longer-term outlook remained "bullish".

An increase in global supplies was expected late this year, against a backdrop of uncertain economic growth.

New Zealand markets would also feel some ongoing pressure through to the first quarter of 2012, the report's co-author Rebecca Redmond said.

A key factor was the slaughter of United States' cattle herds due to severe drought in the southwest, resulting in an increase in US domestic supply, a key New Zealand market, against a backdrop of softening consumer demand.

About 25% of US beef cows were farmed in Texas, Oklahoma and New Mexico - areas that were experiencing the worst drought on record.

US beef production would surge early next year but rapidly decline later in the year and remain low until at least 2014.

The US decline would likely support higher farm gate prices in New Zealand.

"The US is a key export market for New Zealand beef but also a key competitor in a number of significant overseas markets," Ms Redmond said.

In New Zealand, the supply of beef cattle through quarter three remained traditionally low during the winter months and prices were overall 1.5% lower than the corresponding period in 2010.

Although prices reached near-record levels of $4.35/kg in April this year, prices continued to soften through much of quarter-three ending at $3.85.

"Prices have started to lift again in October but still sit at very similar levels to last year," Ms Redmond said.

Indonesia, traditionally New Zealand's third largest export market, had several months of "lacklustre" demand as import levels moved close to the allowable limit of 50,000 tonnes from all supplying countries for the year.

July exports jumped to an unprecedented 5000 tonnes as import permits for beef from New Zealand were released during Australia's ban on live exports.



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