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


NZ farmers see limited benefit from high US beef prices

NZ farmers see limited benefit from high US beef prices as rising kiwi erodes returns

By Tina Morrison

Feb. 20 (BusinessDesk) - New Zealand farmers aren't seeing the full benefit of rising beef prices in the US, their largest market for the meat, because the stronger kiwi dollar is crimping returns, according to AgriHQ.

The price for 95CL imported bull beef was recently at US$2.25 a pound, up from US$2.14/pound last month, US$2.23/pound a year ago and ahead of the US$2.20/pound five-year average, according to AgriHQ data. The price for imported 90CL cow meat was recently at US$2.13/pound, from US$1.98/pound last month, US$2.05/pound last year, and the US$2.06 five-year average.

"US imported beef prices are lifting in response to the lack of beef coming out of NZ and Australia," AgriHQ analyst Reece Brick said in his monthly Sheep & Beef report for February. Still, he said the surging value of the kiwi dollar against its US counterpart had gnawed into margins.

"From a NZ exporter's perspective the NZD:USD is still a nuisance which is chewing into their export returns, having now hung in the US$0.72-0.74 range for more than a month."

Brick noted that imported 95CL was making NZ$6.78/kg last week, but if the NZD:USD had stayed flat from late-November/early-December it would be at NZ$7.21/kg.

The kiwi dollar has strengthened through December and January almost entirely due to US dollar weakness. The greenback is trading around its lowest levels in more than three years against a basket of currencies amid speculation the protectionist Trump administration could pursue a weaker currency to help bolster US exports and its 'Made in America' agenda. Demand for the greenback is also waning as investors see central banks in other parts of the world raising interests rates, taking the shine off yields in the US.

The US is New Zealand's largest market for beef, taking 191,075 tonnes, or 47 percent of New Zealand beef exports, in the 2017 calendar year, worth $1.25 billion, according to figures compiled by the Meat Industry Association of New Zealand.

AgriHQ's Brick said US buyers were initially slow to react to news that the New Zealand cattle slaughter had begun to stall as improved feed conditions prompted farmers to hold onto their stock, but successive weeks of low offerings on the spot market changed the tone, and prices had risen for five weeks in a row.

Also helping bolster the price for imported beef in the US was weaker supply from Australia as farmers held onto stock following rain, and as Chinese and Canadian traders sought increased volumes of lean grinding beef from New Zealand, pulling beef away from the US, Brick said.

Consumer demand in the US remained positive on the back of a strong economy, which is expected to stoke demand for beef and other proteins over the next 12 months, he said.

"Market participants are anticipating imported beef prices to hold strong through until at least March, mainly based off the fact few of the factors driving the market are likely to change," Brick said.



© Scoop Media

Business Headlines | Sci-Tech Headlines


'Visionary' Leaders: Primary Sector Council Announced

A group of visionary agribusiness leaders is set to help our primary sector capture more value from its work, Minister of Agriculture and Rural Communities Damien O’Connor says ... More>>


Land Report: Issues With Soil Degradation

An environmental report released today has found we are damaging and losing our soils and our native plants and animals. More>>


Water Quality Report: Cause For Optimism

National River Water Quality Trends released by Land, Air, Water Aotearoa (LAWA) this week, reveal that for all river water quality parameters monitored over a 10 year period, more sites were improving than deteriorating. More>>


IMF Report On NZ: Positive Economic Outlook

Minister of Finance Grant Robertson has welcomed the IMF’s Concluding Statement, released following its annual visit, which provides an independent assessment of the strength of the New Zealand economy. More>>


Retail Power Price: Review Panel Named

The Energy and Resources Minister Megan Woods has released the details of who will sit on an expert advisory panel which is tasked with leading a review into the price of electricity in New Zealand. More>>


Increasingly Disruptive Threats: Govt Cyber Security Refresh

Broadcasting, Communications and Digital Media Minister Clare Curran today announced a comprehensive refresh of New Zealand’s approach to cyber security. More>>


Regional Growth: Action Plan To Modernise Taranaki’s Economy

The Provincial Growth Fund (PGF) will invest up to $20 million to help future-proof the Taranaki region by diversifying its economy, creating additional jobs and leveraging off the strong base the region has established through its oil, gas and agricultural ... More>>