With no one dining out, Chinese cold storage facilities are flooded with product, AgriHQ analyst Reece Brick said.
“From a New Zealand perspective the timing couldn’t have been worse.
“Large-scale buying for the Chinese New Year festivities meant processors’ inventories were well-stocked going into the outbreak.
“A large portion of the Chinese workforce remains on leave too, further slowing down the movement of product.”
Many farmers are already facing a four-week wait to get cattle killed at a time when feed is in short supply, he said.
However, processors say they’ve found extra cold storage and are diverting product to other markets.
Alliance livestock and shareholder services manager Danny Hailes says efforts to contain the virus are starting to affect prices.
“The coronavirus outbreak is affecting the consumption of red meat in China, primarily in food service such as restaurants and on the flow of product through the supply chain and there is downward pressure on prices.”
Inventory levels are at normal levels, ensuring Alliance’s ability to process stock is not constrained.
The outbreak coincides with the Chinese New Year celebrations and to try to contain its spread the holiday has been extended and people encouraged to stay at home.
That prevents workers who travelled to visit family from returning home, which is hindering the resumption of normal activity.
Silver Fern Farms chief executive Simon Limmer says people staying home and not eating out is affecting sales to the retail and restaurant trade.
“In the short-term the virus will have an impact on our chilled programmes which are reliant on the retail and restaurant trade.
“As customers stay at home the shelf life of chilled items is impacted.
“This creates nervousness with customers who are reluctant to commit to large volumes of product.”
Distribution of meat remains an issue.
“Congestions at ports and extensions to holidays have created further delays of product flowing into the market, which puts pressure on processing.”
Silver Fern is getting daily updates on the Chinese situation and Limmer says it has secured enough cold storage to ensure normal levels of processing.
Anzco chief executive Peter Conley said the company has been taking a cautious approach to processing capacity through January because of China’s New Year.
“We’ll continue to monitor the situation closely and envisage things will become clearer next week when Chinese businesses start to reopen following the extended New Year break.”
The impact of the virus was felt in weaker prices at the Napier and Christchurch wool sales because of market uncertainty and the extended shutdown of mills in China.
Assuming the outbreak can be contained, the ANZ Bank expects an immediate but short-term impact on the volume of sales and price of food exports and tourism.
Dairy Companies Association executive director Kimberly Crewther has not had any reports of issues facing dairy exporters.
NZ’s kiwifruit crop won’t arrive in China until April and Summerfruit NZ acting chief executive Richard Palmer says this season’s $28 million cherry export crop arrived in time for the Chinese New Year and the season was effectively over before the virus struck.
By late this week the virus had killed more than 170 people, infected more than 7500 others and been confirmed in at least 15 countries.
China has underpinned the recent rapid rise in global red meat prices as it seeks alternative sources of protein for the more than 200 million pigs that have died or been killed because of African swine fever.
China now buys a nearly a third of all NZ food exports, worth $16.7 billion last year, Businessdesk reported.
That was up from 24% of all NZ food exports a year earlier.
Beef led the way, rising 112% to $1.7 billion in the year to December on the back of the fever and now accounts for nearly half of all beef sales in total value and quantity.
