Volume,not value, gets record red meat returns

Red meat exports are up but values are down. Photo by Stephen Jaquiery.
Red meat exports are up but values are down. Photo by Stephen Jaquiery.
Total red meat export revenue might have reached a record high in the first quarter of the 2015-16 meat export season, but average per-tonne values were down.

More shipments were responsible for the increased revenue in beef and veal, lamb and mutton, analysis by Beef + Lamb New Zealand's Economic Service showed.

Beef and veal exports generated $682 million in the first quarter, up 14% compared with the same period last season.

That reflected a 15% increase in shipments, while the average per-tonne value was down 1%.

Exports to North America, the largest destination for New Zealand beef and veal, remained unchanged from the previous season, at levels 33% higher than the five-year average.

That mainly reflected strong demand for beef in the US. However, the average value of exports was down 8.2%, despite a 15% depreciation of the NZ dollar against the US dollar over that period.

Lamb export returns reached a record high of $589 million from October to December, up 12% on the same period in 2014.

That reflected a 16% increase in shipments, which was partly offset by a 3.6% decline in the average value.

Demand was particularly strong in the European Union and North Asia, where shipments increased by 24% and 18% respectively.

While there was a slight improvement in the average value (up 0.8%) of exports to the EU, the rise in shipments to North Asia coincided with a 16% drop in the average value, highlighting the economic slowdown and uncertainties in China, the report said.

Mutton export returns reached a record high of $96 million, with dry conditions, particularly in northern parts of the South Island, boosting production and export volumes.

Mutton exports averaged $5070 per tonne, 6.5% down on the same period in 2014-15, and the decrease would have been larger without the depreciation of the NZ dollar.

The largest decrease in average value was in North Asia, the largest market region for New Zealand mutton exports.

Farm-gate prices for lamb and mutton dropped over the first quarter of the season, following a normal seasonal decline, but the decline was greater than in previous years.

It was driven by dry conditions, which led to an increase in sheepmeat production, weaker-than-expected markets, particularly for frozen exports, and weaker co-product lamb and sheepskin returns.

Farm-gate prices for cattle remained at near-record high levels, after several months of increases in 2015, but were expected to start easing as US demand for beef slowed.

The Beef + Lamb New Zealand Economic Service will review its farm-gate price forecasts in the 2015-16 mid-season report to be published in late February.

Commodity prices were a touch softer last week as the ASB NZ commodity price fell in US dollar terms. However, a fall in the kiwi against the US dollar offset the fall, so that the index increased 0.7% in NZ dollar terms.

The sheep/beef index drove most of the overall fall, dipping 1.5% in US dollar terms. Lamb prices posted the largest fall of 2.2%, while beef prices dipped 1.5%.


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