Positive outlook for sheepmeat and beef exports

Despite significant disruption from COVID-19 and widespread drought, B+LNZ says the 2019-20 season looks positive.

“While the drought and COVID-19 have both had impacts for farmers and meat processors, the fundamentals are looking likely to remain strong for New Zealand sheepmeat and beef exports this year,” says B+LNZ chief economist Andrew Burtt.

“Red meat is expected to remain a key component of many diets and African Swine Fever (ASF) in China continues to drive a shortage of pork there, which underpins solid demand for beef and sheepmeat imports there.”

B+LNZ’s Mid-Season Update forecasts beef, lamb, and mutton farm-gate prices to maintain their high levels by long-term historical standards, supported by a strong start for the first half of the season and an expected weakening of the New Zealand dollar. 

New  Zealand’s export receipts for beef and veal, and lamb and mutton (including co-products like offal, meat-and-bone meal and hides and skins) are forecast to total just under $9 billion.

Beef export receipts are expected to pass $4 billion for the first time, lifting 18% to $4.6 billion.

A lift in the average export value for lamb offsets a lower lamb crop in 2019, resulting in a 4% lift in total lamb export receipts to $3.54 billion. 

B+LNZ says average weighted farm-gate prices for 2019-20 remain near historical highs despite disruption by COVID-19 and widespread drought.

Prices reached record highs in the first half of the season, providing a strong foundation for a weaker second half as the disruptions of COVID-19 and drought weigh on farm-gate returns.

B+LNZ it is expecting significant short-term volatility in market demand and prices, but demand fundamentals in key markets such as China are likely to remain solid.