Revenue for dairy — the country’s largest export — was forecast to grow 6% to a new high of $23.3billion, while red meat and wool revenue was tipped to increase to a record $12.4billion.
Horticulture export revenue was expected to grow 5% to $7.1billion, processed food and other products up 3% to $3.3billion and arable exports up 5% to $265million.
Seafood export revenue was forecast to increase 4% to a record $2billion while forestry export revenue was set to increase to $6.6billion.
Strong demand and weak supply resulted in Global Dairy Trade (GDT) prices reaching a record high in March this year.
Since then, global dairy prices have consistently declined — the GDT price index has dropped by 33% since its peak in March.
Despite those falls, the average GDT prices for the dairy season to date were significantly higher than their five-year average.
Demand for dairy had weakened in recent months driven largely by decreasing demand from China, New Zealand’s largest export market.
On the supply side, although milk production in New Zealand and Australia was expected to decline, global supply was likely to increase slightly — driven by improved milk production in the United States, the world’s second-largest milk producer.
Year-on-year in September, US milk production grew by 1.5%.
The weakening of demand and slight strengthening of supply was likely to persist for the short to medium term and should keep dairy prices subdued, the report said.
Overall, despite the likely decline in milk supply, total dairy export volumes were likely to remain similar to 2021-22 because of the inventory overhang from the previous year.
The above-average global dairy prices, combined with a weak New Zealand dollar, were expected to result in a high farmgate milk price this season.
New Zealand’s all-company average milksolids payout for the 2022-23 season was forecast at $8.95/kgMS, a decline from the previous season’s record high of $9.29.
The high payout was key at a time when farmers were facing high input costs.
Dairy farm input costs were estimated to have increased by 17% in the 12 months to September this year.
Weaker purchasing power in key markets was expected to place downward pressure on meat prices as consumers adjusted their spending by reducing portion sizes, trading down to lower-priced proteins and shifting from food service to ready-to-eat and retail products.
Higher in-market inventories were also contributing to lower importer demand.
Demand for beef and sheepmeat was expected to be softer over the next two years before recovering.
Log export revenue fell 5.9% in the year to June 30, a better result than previously forecast, largely due to a depreciation of the NZ dollar against the US dollar and stronger than expected demand from China.
China’s property market continued to decline due to policies aimed at curbing debt and financial risks. While construction had slowed, government-led infrastructure projects had continued, which was providing demand support for New Zealand logs.
Looking forward, log demand was forecast to decrease as China’s economy slowed down and global demand also weakened, resulting in reduced log prices and export volumes.
