It’s well documented that lamb markets are in a poor state, but what’s the story with beef? The bad news is prices are definitely on the way south too. The good news is it’s not as intense as with lamb and mutton.
There are two interlinked factors pulling meat prices down across the globe – an oversupply of product in stock due to overzealous buying earlier in the year, and falling sales to consumers as inflation causes everyone to be more careful about where they spend their money. While the former is an issue for both beef and sheep meat, consumers aren’t flocking away from beef quite as quickly.
One big reason is the price point. Lamb is one of the more expensive proteins you can buy, and history shows that when money is getting tight, those expensive products take the earliest and hardest hit. Generally, that’s because customers switch to a cheaper alternative at the retail level. But it’s often because people begin dining out less too, especially at more expensive restaurants. And this sector buys up a larger portion of New Zealand lamb than NZ beef.
Beef is around the middle of the pack when it comes to cost, usually below lamb, venison, and some seafoods, but above chicken and pork.
Another helpful point is beef is often the default meat choice for much of the world, which gives a bit more resilience to buying. The likes of lamb are increasingly viewed as a niche “nice to have” option, especially as the traditional Sunday roast custom slowly fades into the history books.
This doesn’t mean there won’t be some pain points going forward, though, mostly due to the deteriorating state of China’s demand. A big part of that is the pure volume of beef hitting its shores in recent months. Import data for July-September shows 791,000t entered China, jumping 186,000t or 31% compared to the same period last year. Most of that’s coming from South America, but the likes of the United States and Australia were more active too.
Combine this with the Chinese economy really coming off the boil, and importers there have been stuck with loads of beef they are struggling to move. The fact that almost no one has even talked about Chinese New Year buying is testament to this, given that now would usually see a flurry of trading activity.
For the US, it’s more of a short-term pain, long-term gain scenario. Western and central states are stuck in drought, which is eating into breeding herd numbers massively. The beef cow kill in the past 12 months is the highest on record going back to at least 2006, and the heifer kill has been historically high over this period too. That’s meant an oversupply of domestically produced manufacturing beef in the present, hurting prices. That should turn on itself from next year, though, as the cow kill falls off due to herd rebuilding. This will present the opportunities that have been lacking for bull beef this year.
This article was written by AgriHQ analyst Reece Brick. Reece’s reports provide key insights into what makes our sheep and beef markets tick. Subscribe to AgriHQ reports here.
