The hoped-for boost to lamb prices from Chinese New Year celebrations has failed to materialise.
Dave Courtney, the chief customer officer at Silver Fern Farms, described sales from the annual celebrations held this year on February 10 as “subdued”.
“Overall, the Chinese New Year period was relatively subdued compared to previous years,” he said.
AgriHQ senior analyst Mel Croad said that is also her understanding and consistent with a lacklustre Chinese economy, which affects pricing and sales for high-value products such as meat.
Chinese traditionally celebrate the 15-day lunar Chinese New Year festival with family gatherings centred on food.
China took 56% of New Zealand sheepmeat exports last year, and exporters had hoped the new year celebrations would boost lamb prices, which are currently about 25% lower than last season.
Courtney said Chinese consumers remain cautious due to the effects of deflation, a weak property sector and high local government debt, but the country remains an important market for exporters.
“The Chinese market gives us optionality and the ability to move volumes, which helps to create price tension in other markets and also maximise the value we can make from the whole carcase.”
The global sales director for the Alliance Group, James McWilliam, said consumer demand in China remains weak due to cost-of-living pressures and stagnating incomes.
“The food service sector, which is where a significant amount of our products are consumed, continues to be weak.”
The market is being inundated with greater volumes of cheap South American beef, and Australia continues to export large volumes of mutton.
“Although it is early days, there are indications of increased sales activity post-Chinese New Year so we will be focused on leveraging this to support increased consumption over the coming months,” said McWilliam.
Croad said the Chinese economy still faces some challenges before it “will start firing”.
Markets in the United Kingdom, European Union, United States and Middle East are performing better than expected.
As parts of NZ start to dry and feed quality declines, Croad expects stock flows, which have been slow to date, will accelerate.
A NZ Foreign Affairs and Trade report on China says the fundamentals that make it our single largest export market remain, but there are headwinds.
Plummeting consumer confidence saw NZ sales last year of dairy, meat and forestry fall by up to 20%.
A year after dropping its pandemic restrictions, China is undergoing an economic transition but the report adds it still provides a large and growing market of middle-class consumers seeking high quality food.
The Chinese economy grew 5.2% last year, exceeding the government’s 5% target and bouncing back from a lacklustre 3% growth in 2022. It is still well below the 6% achieved between 2015 and 2019.
Despite price discounting, last November’s Singles Day, China’s largest e-commerce sales festival, saw a modest 2% increase in year-on-year sales, less than the 2.9% achieved a year earlier.
Forecast economic growth for this year is 4%, with economists stressing the need to stabilise the property market and encourage consumer spending.
Youth unemployment, considered an obstacle to consumer confidence, dropped from 21.3% in June to 14.9% in December while deflation was 0.3% last year.
The report says that the Chinese Government has introduced stimulatory economic policies such as issuing sovereign bonds and allowing local governments to refinance debt by issuing bonds.
