Beef, lamb prices expected to fall

Farm-gate prices for New Zealand beef and sheepmeat are not expected to drop significantly below...
Farm-gate prices for New Zealand beef and sheepmeat are not expected to drop significantly below long-term averages in the year ahead. PHOTO: STEPHEN JAQUIERY
Reduced global demand for higher-value beef and lamb cuts in the year ahead will reduce New Zealand farm-gate prices for beef and sheepmeat from the record highs experienced over recent seasons, a new report from Rabobank says.

In its annual outlook for the meat sector, Rabobank said a slow and uneven recovery in the international food service sector, combined with weak global economic conditions, would reduce demand for higher-value New Zealand red meat cuts such as prime beef and lamb racks.

Report co-author Blake Holgate said while lower demand for premium cuts would negatively affect export returns, farm-gate prices for New Zealand beef and sheepmeat were not expected to drop significantly below long-term averages.

Reduced demand for higher-value cuts would pull New Zealand beef export returns back from the record highs of quarter four last year, but Rabobank expected solid demand for New Zealand beef in the United States and China would underpin returns for New Zealand exporters in 2021.

Robust Chinese demand would also play a key role in holding up New Zealand sheepmeat prices in the coming year, as would strong global retail demand and tight lamb supply here and in Australia, he said.

The report said New Zealand’s beef production would remain flat in 2021 while the long-term trend of declining New Zealand sheep supplies would continue.

"The country’s beef production in 2021 is expected to remain at similar levels to this year with climatic conditions and farm-gate pricing poised to determine if production is above or below 2020 levels.

"The downward trend in New Zealand lamb supplies is forecast to continue for the 2021 season, with poor climatic conditions earlier in the year having impacted stock numbers and lambing percentages in many regions," he said.

Globally, 2021 would signal a return to animal protein production growth driven by the recovery of China’s pork production.

African Swine Fever remained the biggest change driver in global animal protein and pork production was expected to grow faster than any other species in the year ahead, largely because of the recovery from ASF in China and Vietnam, Mr Holgate said.

Production in the global poultry, aquaculture and beef sectors was also forecast to grow, while wild-catch seafood production was expected to decline.

In addition to the ASF recovery, the report identified a range of issues affecting global animal protein that created areas of opportunity and risk for sector participants next year.

Key among those were global animal protein trade and the pace of the Covid-19 recovery, it said.

"China’s pork, poultry, beef and seafood imports are respectively estimated to account for about 45%, 10%, 25% and 10% of global trade in 2020 and it has been using this market dominance to drive down import prices.

"In the year ahead, we expect to see China’s political relationships with its trade partners increasingly influence its sourcing, along with its aims to improve food security and cost," Mr Holgate said.

Brexit also shaped as a key trade issue. With the UK and EU yet to finalise a new trade deal, some of the post-Brexit scenarios included a potential surplus of pork and beef in the EU, an increase in meat prices in the UK and a new sizeable, high-paying destination for animal protein exporters around the world, he said.

Sustainability in the animal protein supply chain continued to be a hot issue around the globe and the role of markets and regulators was expected to become clearer in 2021, he said.

Despite criticism from some, consumer preference towards eating meat was still high. But it would only remain high if animal protein supply chains proactively took steps to reduce emissions or lower their sustainability footprint.

The number of animal protein, food retail and food service companies making commitments to lower greenhouse gas emissions throughout their supply chain was expected to continue to grow in the coming 12 months, Mr Holgate said.

At the same time, regulatory targets in relation to sustainability were increasingly being set around the globe, but the road to achievement remained unclear.

"In 2021, we anticipate governments will face pressure to impose regulations to drive change if the market isn’t seen to be delivering progress at the scale and speed expected by society."

 

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