Wednesday, April 24, 2024

Key beef markets starting to toughen up

Neal Wallace
Demand for manufacturing beef quieter than anticipated.
Reading Time: 1 minute

Key markets for New Zealand manufacturing beef are starting to show signs of weakness from competition and quieter-than-expected demand.

Prices for bull and cow manufacturing beef in the key United States market eased US$20 to 25c/pound in recent weeks and the expected pickup in demand from China has so far not happened.

AgriHQ senior analyst Mel Croad said compounding the problem have been delays in the expected easing in domestic US production, economic pressures softening demand and high export volumes of Australian manufacturing beef.

She said Australia beef production is higher than it has been for some years, with that higher volume sold to markets in the US and Asia.

In May alone Australia exported 91,500t, the second highest monthly total so far this year, of which more than 40% was shipped to China and the US.

Drought in the US has led farmers to liquidate their herds and while production is declining, it hasn’t yet reached a point where demand is having to be met by imported beef.

NZ farmgate prices for manufacturing bull and cow beef are close to levels of a year ago despite weaker international prices.

Croad said total average NZ export beef prices for April were $9/kg compared to $10/kg a year earlier.

At $9/kg, Croad said, April export prices are still $1/kg ahead of the five-year average.

Looking ahead, Croad said US beef production will continue to tighten, providing opportunities for imported beef, but prospects are looking more likely that an El Niño weather system is forming in Australia.

The Australian Bureau of Meteorology has calculated a 70% chance of the weather system forming by the end of winter or early spring, which tends to create drier conditions on the east coast.

This could have implications for Australia’s beef herd, sending production even higher.

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