NZ may set a record for the value of the beef exported
New Zealand beef exports may surpass for the first time the ceiling of US $2.5 billion thanks to increased demand from China, announced Beef+Lamb New Zealand’s Chief Economist Andrew Burtt. The outlook is positive, despite the widespread drought and COVID-19 disruption, said Mr. Burtt. In fact, New Zealand’s export receipts for beef and veal, and lamb and mutton (including co-products like offal, meat-and-bone meal and hides and skins) are forecast to total just under NZ $9 billion (US $5.5 billion), which is equivalent to NZ $1800 (US $1,100) for every man, woman and child in the country.
"While the drought and COVID-19 have both had impacts for farmers and meat processors, the fundamentals are looking likely to remain strong for New Zealand sheepmeat and beef exports this year. Red meat is expected to remain a key component of many diets and African Swine Fever (ASF) in China continues to drive a shortage of pork there, which underpins solid demand for beef and sheepmeat imports there", stated Andrew Burtt.
China's deficit of pork is expected to be at 40% this year, as the ASF virus is taking a large toll on the national pig inventory. That means more meat imported and officials from Beef+Lamb New Zealand hope to gain a larger market share in several important markets across the world.
The outbreak of COVID-19 disrupted an incredibly strong start to the 2019-20 season. Chinese demand for New Zealand’s red meat exports was severely curtailed during the second quarter of the season and the human and economic toll of the virus in both Europe and the US will impact demand for red meat exports for the remainder of the season. Significant short-term volatility in market demand and prices are expected.
Despite the disruption, demand fundamentals from China remain solid. The shortage of pork in China as a result of ASF is expected to underpin a recovery of demand for New Zealand sheepmeat and beef exports. In 2020, Chinese pork production is expected to be down 40 percent on pre-ASF levels. During 2019, Chinese consumers were increasingly turning to sheepmeat and beef as alternatives to pork. As economic activity recovers following COVID-19 being brought under control, demand for meat is expected to similarly recover.
Shifting market access dynamics have the potential to change the distribution of beef exports this season. The US is forecasting a significant lift in beef exports and has gained improved market access to China and Japan, though US exports have currently been significantly impacted by COVID-19 due to the closure of meat processing plants.
This may increase competitive pressure for New Zealand beef in some markets but has the potential to create opportunities in others. Brazilian beef has recently regained access to the US market, increasing competition on the US imported beef market. However, a significant reduction in Australian sheepmeat and beef production will provide some support for New Zealand's red meat demand in key markets during 2020.
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