Rabobank cuts loan rate
Rabobank New Zealand will reduce the variable base rate on its rural loans by 0.5%, effective from 16 October 2024.
China's Covid lockdowns are impacting on New Zealand agriculture, according to Rabobank.
The agribusiness banking specialist says the current strict lockdowns in many major cities in China - as the country tries to eradicate Covid - are not only affecting its local citizens, but also having flow-on impacts on trading partners, including New Zealand.
RaboResearch general manager for Australia and New Zealand Stefan Vogel says there are four specific impacts of the lockdowns that are set to have increasing ramifications for New Zealand agribusiness: disruptions to freight logistics, Chinese corn plantings, dairy demand and hog pricing.
"The already-stressed global container logistics situation is becoming more complicated due to massive delays around the Shanghai port," Vogel explains.
He says prices paid for the transport of dry bulk materials increased five-fold through 2021 as a result of Covid lockdowns in different parts of the world. Vogel adds that while these prices have dropped from the September 2021 highs, the ongoing lockdowns in China will add to continued container logistics issues and keep container freight prices well above historic levels for 2022 and well into 2023.
Meanwhile, he says disruptions to corn plantings in China - the world's second-largest corn producer and also the world's main corn importer - are complicating already extremely tight global grains markets.
"Chinese corn planting faes delays in two key provinces - responsible for 20% of the country's crop - as some farmers are trapped in major cities and are unable to access their fields due to the Covid lockdowns."
However, Vogel concedes these delays in planting Chinese corn are not the biggest driver of current global grain prices.
World corn prices hit a 10-year high in April this year, primarily driven by concerns about a dry season in Brazil and below-normal rainfall forecast for the next three months, which could reduce Brazilian corn yields.
"There are also cool and wet conditions for corn planting in the US and an expected reduction of about 50% in Ukrainian corn production in 2022, putting upward pressure on global grain prices."
Meanwhile, Vogel points to the spread of the Omicron variant and China's "zero-Covid" policy bringing strong headwinds to the country's food service sector.
"Dairy demand in food service is slowing in China while, according to our calculations, dairy products in China produced from imported Oceania whole milk powder (WMP) are now more expensive than those from locally-produced dairy for the first time in eight years."
Vogel says after a record-breaking 2021 in milk powder imports by China, the demand uncertainty from Covid restrictions is likely to dampen the country's import appetite in 2022.
In addition, China's Covid restrictions have resulted in a big drop in food service sales of meat products, which have impacted hog production and prices, Vogel adds.
"Chinese hog producers have liquidated herds to avoid further losses, imposing further downward pressure on Chinese pork prices which can also impact China's feed grain import needs.
"This also has potential implications for Chinese beef and sheepmeat demand."
He says while retail prices in China for both beef and lamb are currently at record highs, New Zealand exporters will be keeping a close eye on how demand for these products hold up, "as consumers potentially look to trade down to pork and other cheaper animal protein alternatives."
Prime Minister Christopher Luxon says the relationship between New Zealand and the US will remain strong and enduring irrespective of changing administrations.
More than 200 people turned out on Thursday, November 21 to see what progress has been made on one of NZ's biggest and most comprehensive agriculture research programmes on regenerative agriculture.
The a2 Milk Company (a2MC) says securing more China label registrations and developing its own nutritional manufacturing capability are high on its agenda.
Stellar speakers, top-notch trade sites, innovation, technology and connections are all on offer at the 2025 East Coast Farming Expo being once again hosted in Wairoa in February.
As a guest of the Italian Trade Association, Rural News Group Machinery Editor Mark Daniel took the opportunity to make an early November dash to Bologna to the 46th EIMA exhibition.
Livestock can be bred for lower methane emissions while also improving productivity at a rate greater than what the industry is currently achieving, research has shown.
OPINION: NIWA has long weathered complaints about alleged stifling of competition in forecasting, and more recently, claims of lack of…
OPINION: Adding to calls to get banks to 'back off', NZ Agri Brokers director Andrew Laming has revealed that the…