Shortage makes beef lead commodity price rises

Keith Cooper
Keith Cooper
Flooding in Australia and storms in the United States have combined to push beef prices to record levels.

Meanwhile, prices for most of New Zealand's export commodities continue to rise, the ANZ Commodity Price Index reaching record levels after lifting 2% in December, its fourth successive price rise, led by a massive 10% rise in the price of beef.

Silver Fern Farms chief executive Keith Cooper said US beef processors had had to buy more imported beef as winter storms reduced domestic supply and then last week's Queensland floods forced some processors to close.

"There is a real shortage, which has pushed bull beef up US13c a pound to over US200c a pound, which we have never seen before."

New Zealand manufacturing beef prices in the past week were about $1 a kg higher than at the same time a year ago, according to NZX Agrifax.

Prices now are between $3.25 and $3.70 a kg compared to $2.35 and $2.75 a kg.

Dow Jones has reported that cattle futures markets have also risen sharply in the expectation supply will remain tight for some time, aided by an expected smaller-than-usual corn crop pushing up feed costs.

Rising meat prices led the increase in December's ANZ Commodity Price Index, in which 10 commodities rose in price and two eased.

December's index reached 302 compared to 296.1 in November and 245.5 in December 2009.

Beef prices rose 10% in December compared to a month earlier, sheepmeat 1.9% and venison 1.3%.

Mr Cooper said offal, skins and casings were also strengthening in price, a comment supported by the index for skins, which rose 5.2% in December.

Aluminium, seafood, wood pulp, dairy and sawn timber prices rose by up to 1%.

Prices for wool eased 2.1% and logs 1.4%. Apples, kiwifruit, cheese, butter and casein were unchanged.

ANZ economist Steve Edwards said that in New Zealand dollar terms, the index rose 4.5%, which reflected the easing exchange rate in December.

The economy was benefiting from higher commodity prices, but he said those benefits were being curtailed by adverse weather curbing product volume and a rural property market that remained under pressure.

"But sustained lifts in commodity prices, if sustained over time, will present a tremendous windfall for the economy."

 

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