NZ on track to fill US beef export quota for first time in 11 years
By Tina Morrison
Aug. 26 (BusinessDesk) - New Zealand may fill its annual beef export quota to the US for the first time in 11 years as farmers cull more stock to cash in on record beef prices amid a shortage in America.
Beef exports to the US rose 7.6 percent to 14,724 tonnes in July, from the year earlier month, according to data released by Statistics New Zealand today. That takes US beef export volume for the first seven months of this year to 164,493 tonnes, compared with 141,973 tonnes at the same time last year, and suggests New Zealand may reach its US annual quota of 213,402 tonnes for the first time since 2004.
The ASB beef price index rose 7 percent over the four weeks to Aug. 14 to a record 305.8, helped by a weaker New Zealand dollar and strong US demand as drought-ridden American farmers rebuild their herds over the next two years. Should New Zealand hit the quota limit, its US tariff on beef would rise to 26.4 percent of the export value, from the current rate of 4.4 US cents per kilogram, according to the Meat Industry Association. That would likely prompt meat processors to divert beef to other markets such as Japan, Korea and China, where prices are weaker, analysts said.
"If this rate of growth does continue for the remainder of the year, it's likely that we will fill the quota," said ASB Bank rural economist Nathan Penny. "Prices may fall or plateau as companies have to divert the beef that they have got to other markets. That means that current stratospheric prices may give way to merely sky high."
New Zealand beef volumes have increased as dairy farmers cull more cows following a slump in returns for dairy products, and cattle farmers increase stock weights to benefit from higher prices.
The value of New Zealand beef exports to the US jumped 48 percent to $108.5 million in July, from the year earlier month, according to data compiled by the Meat Industry Association from the latest trade statistics.
The US accounts for 47 percent of New Zealand beef exports by volume and 44 percent by value, according to the latest data for July. China is the second-largest market, taking about 20 percent of exports.