Higher-value steak cuts are feeling the same repercussions as higher-value lamb cuts and venison due to global restaurant demand struggling to regain traction.
This means beef exporters will be heavily reliant on the strength of demand for lower-value cuts until there is some change.
Import data from the US shows an increasing volume of cheaper, manufacturing beef appearing from Central and South America, which is becoming more attractive to US end-users.
Many within the industry expect it will only be a matter of time before more US buyers start to approve their usage.
Central American beef can now enter the US tariff-free, while the approval of beef from Brazil and Argentina has seen a pronounced lift in beef imports from next to nothing to now over 8000 tonne this year.
Already imports from Central and South America have climbed to 77,000t for the year. This is a 16,000t lift over the same period last year.
While these volumes still pale in significance to the combined volumes of NZ and Australian beef sold into the US, it’s the first time they have made a competitive bid on this market. Not only that, but Mexico is quickly climbing the ranks on import volumes into the US, following the signing of the North American Free Trade Agreement.
Mexico is now the second largest beef importer to the US.
Imports are up by over 30,000t on last year and over 40,000t higher than in 2018, adding further competition to this market.
Up until recently, NZ’s only real competition in the US beef market came from Australia.
NZ and Australian manufacturing beef have typically set the benchmark for the US imported beef prices, meaning when either one’s supply to the US fell, the other would enjoy stronger pricing for their offerings which then flowed back to stronger farmgate beef prices.
The concern for NZ and Australian imports is there is now a growing list of competitors waiting in the wings which could clip any competitive advantage either country used to enjoy.
With neither NZ or Australia in a position to up manufacturing beef volumes to the US in the coming season, it looks like these relative newcomers could effectively plug the gap, lessening our ability to have a competitive say and potentially keeping a lid on imported beef prices. However, market conditions in the US need to remain competitive enough, otherwise the South American beef exporting powerhouses will simply focus their attention squarely on China.
Mexico, Brazil and Argentina are all signalling growth in beef production and exports, which is in stark contrast to NZ and Australia.
To remain competitive within our beef markets, our focus may need to switch to aligning with consumer preferences of quality rather than quantity. That may be a hard ask within the current global economy, but longer term it could be our only option.
