Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


US beef challenges present opportunities for NZ producers

Media Release March 15, 2013 1

‘An industry in transition’ – US beef challenges present opportunities for NZ producers

The United States’ beef cattle industry is undergoing a major transition, with a significant contraction of its domestic herd diminishing available beef supply locally and offshore. This presents opportunities for New Zealand producers to cash in on increased market share, according to a visiting US meat industry expert.

Rabobank’s Texas-based vice president for animal proteins, Don Close says the reduction in the US herd is “unprecedented”, with current on-feed numbers at six per cent lower than 12 months ago, and set to continue to decrease into the 2013 Northern Hemisphere summer period.

“Right now, with a significant period of drought, the ongoing tightening of our cattle herd is really becoming increasingly evident,” Mr Close said.

“We need rain to recharge our subsoil levels to ensure we have a good grass season. If this happens, we will see producers holding onto their cattle, particularly heifers, but if it doesn’t happen, those numbers will hit the slaughter market because it will be too dry to keep them on-farm.

“We’re damned if we do, damned if we don’t – no matter what happens with our season this year, there will be a shortage in beef supply going into 2014. We’ve painted ourselves into a tight corner.”

Mr Close is part of Rabobank’s Food & Agribusiness Research and Advisory division where he is responsible for analysing the beef and protein sectors. With a lifetime spent working in many roles in the US beef sector, including livestock buying, broking, meat-packing, risk management and lot-feeding, Mr Close has in-depth knowledge of the North American beef cattle industry.

Speaking at various functions across the North and South Islands this week, Mr Close said that, interestingly, although there has been a huge contraction in US corn exports, down 25 per cent year-on-year, there was also a sharp reduction in ethanol production, leaving grain-fed cattle and hog production above 2012 levels.

“These levels are going to drop in 2013 through to 2014, as the rationing in the domestic beef industry has not yet fully occurred,” he said.

Mr Close said the US had also overdrawn on its Mexican feeder cattle, adding to the decline in available beef supplies entering into the US market.

“The total Mexican cattle industry has declined, especially their heifers, eating into the breeding herd, when shipments increased into the US last year,” he said.

“And as the conditions in Mexico recover, we will see a similar story unfold with what’s happening with the US herd, with Mexican cattle numbers looking extremely tight.”

As far as North American supplies are concerned, Mr Close said Canada had also been trying to stabilise its cattle numbers after the challenges surrounding the BSE (Bovine Spongiform Encephalopathy, or ‘Mad Cow Disease’) issue that took place in 2003.

“Canada is a non-viable source of cattle or beef at present,” he said.

Adding to this, the recent difficulties around food security in the UK and Europe in the wake of the horsemeat scandal could potentially open doors for Australian boxed beef exports to be sent to this region, replacing former meat suppliers facing increased scrutiny across their supply chains, Mr Close said.

“While we are yet to see the full impact of the horsemeat scenario to know who the winners and losers are in this equation, it certainly raises the question about increased New Zealand exports into Europe to take advantage of the drama there,” he said.

“What is worth noting is the US-Europe Free Trade Agreement – which has not yet been ratified – but if this is eventuate it would probably open of the door for greater volumes of US beef entering into Europe taking more market share from other nations.

“The thing we have to realise is that nowadays, we’re playing in an international market – the years of single-country protein supply no longer exist,” he said.

“As soon as we see any signs of recovery, our lean beef market in particular will tighten up like we’ve never seen before, providing the real opportunity for New Zealand producers.”

ENDS


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Science Media Centre: Viral Science And Another 'Big Dry'?

"Potentially, if there is no significant rainfall for the next month or so, we could be heading into one of the worst nation-wide droughts we’ve seen for some time," warns NIWA principal climate scientist Dr Andrew Tait. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news