Possible US-based risks to record red meat farm gate returns

Downside risks are starting to appear in the red meat sector where farm gate prices have been at or near record highs. ANZ’s latest Agri-Focus report said United States trade and biosecurity policies were the main concerns. Beef prices were falling in the US, New Zealand’s largest export market. The US administration would like to have tariffs on imports to support the domestic beef industry but record high retail prices had instead prompted tariff exemptions over the past year, the report said. That situation left the US administration with few options to ease retail prices without undermining the domestic beef industry. The US decided to partly reopen the Mexican border for live cattle imports. It has been closed since November 2024 to stop the spread of parasitic blowfly larva New World screwworm — starting this month. Mexico had historically been a key source of young cattle for feedlots in the US border states, providing 1.2 million per year or 3%-4% of US cattle supply. The border closure in late 2024 was a key reason US beef prices were as high as they were now. While border crossing volumes were likely to take some time to ramp back up, and the reopening plan excluded Texas for now, it was likely to take the heat out of imported beef prices. Both Australia and Brazil hit their quota limits for beef exports to China and had now turned their attention to the US market. US importers, realising they finally had some negotiating leverage, were pushing prices lower. That created an opening for New Zealand in China, where demand remained strong. Most other major players were effectively shut out of the market until the import quotas reset in January 2027. Meanwhile, the US administration had officially opened an investigation into whether lamb imports had disadvantaged domestic producers. As the main exporters, Australia and New Zealand would be impacted if the investigation led to additional tariffs targeting lamb above the 12.5% tariff now in place. While the US was not traditionally thought of as an important lamb market, times had changed. By value, the US was the largest export destination for Australia and New Zealand in 2025, having overtaken China in 2024. For New Zealand, it accounted for 16% of lamb export revenue, behind only the EU and China. For Australia, the US was by far the most important export destination at 28% of exports. The US administration’s investigation had high stakes for the lamb and mutton sector and, depending on how high any tariffs were, would create a significant ripple effect across the global sheep industry. The investigation would take several months and was due to report back in January next year. “Let’s hope one or both of those things don’t happen. All that doom and gloom is hypothetical, though, and here and now prices have never been higher,” the report said. Supply remained tight, especially in New Zealand, which provided less scope for markets to be overwhelmed by a surge of production as happened in 2023-24.