NZ’s exports of red meat staying ‘remarkably resilient’

 Shifting market access dynamics has the potential to change the distribution of beef exports...
Shifting market access dynamics has the potential to change the distribution of beef exports this season. PHOTO: STEPHEN JAQUIERY
New Zealand beef export receipts are expected to pass the $4 billion mark this season for the first time.

Beef + Lamb New Zealand’s mid-season update for 2019-20 forecast beef, lamb and mutton farmgate prices to maintain their high levels, by long-term historical standards, supported by a strong start for the first half of the season and an expected weakening of the New Zealand dollar.

While drought and Covid-19 both had impacts for farmers and meat processors, the fundamentals were likely to remain strong for exports this year, B+LNZ chief economist Andrew Burtt said.

Receipts for beef and veal, and lamb and mutton (including co-products)were forecast to total just under $9 billion.

Beef export receipts were forecast to lift 18% to $4.6 billion while a lift in the average export value for lamb offset a lower lamb crop in 2019, resulting in a 4% lift in total lamb export receipts to $3.54 billion.

The Covid-19 outbreak disrupted an "incredibly strong start" to the 2019-20 season, the update said.

Chinese demand was severely curtailed during the second quarter and the toll of the virus in both Europe and the US would impact demand for red-meat exports for the remainder of the season. Significant short-term volatility in market demand and prices was expected.

However, demand fundamentals from China remained solid and the shortage of pork, due to African Swine Fever, was expected to underpin a recovery of demand for New Zealand sheepmeat and beef exports.

The US was forecasting a significant lift in beef exports and had gained improved market access to China and Japan, although US exports had been significantly impacted by Covid-19 due to the closure of meat-processing plants. That might increase competitive pressure for New Zealand beef in some markets but had the potential to create opportunities in others, the update said.

A significant reduction in Australian sheepmeat and beef production would provide some support for demand for New Zealand red meat in key markets in 2020.

Average weighted farmgate prices for 2019-20 remained near historical highs despite disruption by Covid-19 and widespread drought.

Prices reached record highs in the first half of the season, providing a strong foundation for a weaker second half as the disruptions of Covid-19 and drought weigh on farmgate returns.

The combined challenges of the pandemic and drought had made the 2019-20 season an "extremely challenging one" for farmers. Throughout Covid-19, the red-meat sector had proven "remarkably resilient", it said.

 

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