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

 


Domestic beef prices expected to firm – Rabobank Beef Report

Domestic beef prices expected to firm – Rabobank Beef Quarterly report

Rabobank forecasts New Zealand’s beef prices to firm next quarter, as supplies tighten after the higher, drought-induced slaughter volumes, and forecasts of a wetter-than-average winter also encourage producers to retain stock.

In its recently-released report, the ‘Beef Quarterly’, Rabobank highlights that seasonal pressures are still existent in New Zealand, but have since improved from the poor conditions of the first quarter of 2013. Most regions received some good rainfall, with temperatures still warmer than average, which has enabled some good pasture growth.

Rabobank animal proteins analyst Matt Costello said improved seasonal conditions during May and tightening of supply, allowed prices to recover for most categories during April and May.

“At the beginning of June, the North Island bull price averaged NZD 395c/kg, slightly higher than the corresponding week last year,” Mr Costello said.

Nonetheless, Mr Costello said while some areas have improved, there will be tight feed and water supplies through winter in other regions.

“Total beef slaughter for the New Zealand beef processing season, October to April, remains 20 per cent higher than the same period last year, at 1.529 million head,” he said.

“Following the same trend as the first quarter, the majority of the additional numbers processed have been cows, with more than 600,000 processed during the seven months to April.

“This represents a 56 per cent or 216,791 head increase year-on-year, although this compares to a low base year due to a better-than-normal season in 2012, with the majority of the kill attributed to the dairy herd.”

After drought was officially declared across parts of the North Island in February, with extremely dry conditions throughout most of the country, the Rabobank report shows slaughter volumes have continued to track well above year-ago-levels.

“As a result of the higher production, export volumes throughout 2013 have tracked well above last year, but are expected to slow heading into winter and spring,” Mr Costello said.

Total New Zealand exports from January to April increased 21 per cent year-on-year, to 163,382 tonnes shipped weight, underpinned by strong demand for lean manufacturing beef.

While the US accounts for more than half of New Zealand exports, shipments to China have certainly been “a bright spot” so far in 2013, Mr Costello said.

“Exports reached 20,178 tonnes shipped weight, which is well ahead of the 1,211 tonnes sent last year.”

Tightening of ‘grey channel’ trade, lower domestic Chinese production and stronger demand for New Zealand product has driven this growth, with the Chinese market firmly establishing itself as New Zealand’s second-largest export market.

While the higher production has encouraged higher export volumes, average export values have been tracking slightly lower than the same time last year.

“It will be interesting to see how demand – particularly from the US – tracks if New Zealand supplies tighten and importers are required to pay higher prices,” Mr Costello said.

Global snapshot
In the United States, the Rabobank report said the landscape for the beef industry looks to be ‘gloomier’.

“Feedlots are still being hit by the continuation of strong feed grain prices and an insufficient decline in feeder cattle costs,” Mr Costello said.

“However, despite these challenges, packers have been posting improved margins since May.”

Interestingly, Mr Costello said, total US production year-to-date is larger than expected, mostly attributable to escalated cow slaughter.

In the European Union, prices continued to increase as a result of a combination of the higher price demand for beef – as many players have had to replace horsemeat with ‘real beef’ – and tight supply.

Chinese imports continue to grow, driven by the imbalance between expanding consumption and stagnant production, and the tightening of the ‘grey channel’. Imports have mainly originated from Australia, Uruguay and New Zealand.

Outlook
Rabobank maintains the view that global beef supplies will remain near 2012 levels, with a bias towards a minor increase driven by the Southern Hemisphere – led mainly by Brazil, Australia, Argentina, Uruguay and New Zealand – coupled with continued liquidation in US beef supply given the ongoing drought induced cow-herd liquidation. In addition, exports from India have moderated considerably.

“The broader picture for demand still points to tempered consumer appetite to paying high prices for beef as increases in disposable income worldwide appear to be slowing and threats of inflation continue across the globe,” Mr Costello said.

“The relative value position for beef has diminished as beef prices have risen relative to chicken and pork,” he said.

Rabobank New Zealand is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 110 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative operates in 47 countries, servicing the needs of approximately 10 million clients worldwide through a network of more than 1600 offices and branches. Rabobank New Zealand is one of the country's leading rural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 32 branches throughout New Zealand.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Real Estate: Housing Prices Head South In Most Of NZ

Housing became more affordable for first home buyers in many parts of the country including Auckland last month, as falling prices more than offset rising mortgage interest rates. More>>

ALSO:

Cosmetics & Pollution: Proposal To Ban Microbeads

Cosmetic products containing microbeads will be banned under a proposal announced by the Minister for the Environment today. Marine scientists have been advocating for a ban on the microplastics, which have been found to quickly enter waterways and harm marine life. More>>

ALSO:

NIWA: 2016 New Zealand’s Warmest Year On Record

Annual temperatures were above average (0.51°C to 1.20°C above the annual average) throughout the country, with very few locations observing near average temperatures (within 0.5°C of the annual average) or lower. The year 2016 was the warmest on record for New Zealand, based on NIWA’s seven-station series which begins in 1909. More>>

ALSO:

Farewell 2016: NZ Economy Flies Through 2016's Political Curveballs

Dec. 23 (BusinessDesk) - New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry. More>>

ALSO:

NZ Economy: More Growth Than Expected In 3rd Qtr

Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services, and was bolstered by tourism and transport ... More>>

  • NZ Govt - Solid growth for NZ despite fragile world economy
  • NZ Council of Trade Unions - Government needs to ensure economy raises living standards
  • KiwiRail Goes Deisel: Cans electric trains on partially electrified North Island trunkline

    Dec. 21 (BusinessDesk) – KiwiRail, the state-owned rail and freight operator, said a small fleet of electric trains on New Zealand’s North Island would be phased out over the next two years and replaced with diesel locomotives. More>>

  • KiwiRail - KiwiRail announces fleet decision on North Island line
  • Greens - Ditching electric trains massive step backwards
  • Labour - Bill English turns ‘Think Big’ into ‘Think Backwards’
  • First Union - Train drivers condemn KiwiRail’s return to “dirty diesel”
  • NZ First - KiwiRail Going Backwards for Xmas
  • Get More From Scoop

     
     
     
     
     
     
     
     
    Business
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news