Strong wool eyes China
China looks set to play a key role in helping the New Zealand wool sector shift away from trading as a commodity supplier.
Chief executive Simon Limmer says the coronavirus situation has not eased, but believes that it essentially a matter of time before the flow of product to consumers’ returns to normal.
He says SFF staff in China report small signs that the country is retuning back to normal with more people starting to come back to work, after their extended Chinese New Year break.
“Our customers in China are working closely with us in an attempt to smooth the flow of product through to them and on to consumers,” Limmer told Rural News.
“While some product is starting to move through to the end of the supply chain, things are not back to normal. We are seeing more people return to retail shopping and cooking at home, but it is clear the restaurant/foodservice sector in China will take a while to recover.”
Limmer says port congestion in China is having a downstream impact on the shipping lines that don’t have confidence in their ability to unload containers.
He says this is causing shipments to fall out of schedule, shipping lines to drop containers at other Asian ports and in some cases to cancel sailings to China.
“This is pushing the ‘bottleneck’ back onto NZ ports and exporters,” he says.
Limmer says the tourism sector globally has been hit by fewer tourists traveling from China and says this has had an impact largely on beef steak cuts. He says demand is particularly soft for these prime cuts and elevated production levels from here have the potential to further depress pricing and farmgate returns.
“Other markets globally have seen increased volumes of product flow through to them. To some extent this is normal for sales immediately following the China New Year consumption period, though the volumes diverted into other Asian markets and the USA have certainly been elevated by Coronavirus.
“It’s important to remember that China has become a significant destination for most meat exporters from around the world and therefore many countries are facing the same challenges as we are.
The increased volume being diverted into other global markets is putting downward pressure on pricing.”
Limmer says, so far, SFF have been able to balance the market disruption with the dry conditions across the country so that its plants can keep running to capacity. He says they have also adapted their market mix and created storage capacity to maximise processing capacity and ensure the fastest flow of product through the system and into markets.
