Low supply from both NZ and Australia has meant imported manufacturing-beef prices in the US have not yet started falling back to typical seasonal levels because there are just not the volumes available on the spot market.
The supply season was running late, especially in the rain-affected North Island where spring growth was just starting and farmers were opting to put more weight on their stock.
AgriHQ analyst Mel Croad said the North Island schedule would come off the recent consistent levels about $5.50/kg (bull) and $5.70/kg (steer) as stock eventually came forward in numbers into New Year but not by as much as earlier expected.
At one stage she expected a fall of up to 20c/kg but farmgate prices might now hold up better than that, given the change in market fundamentals.
The kiwi dollar had also fallen about US3c in value over the past several weeks but Croad said that trade remained to play out and some of the major banks were forecasting a NZ$ recovery.
Procurement issues were also pushing processors into paying above schedule in some cases where big numbers of stock could be bought.
More US domestic beef would also be going onto the market in the months ahead but industry economist Len Steiner said in his annual presentation at October’s Meat Importer’s Council of America conference the robust jobs growth would lead to more rapid demand growth.
The 2018 outlook was also boosted by strong global growth though economic risks were also mounting, he said.
As well as US jobs growth, along with record disposable income levels, Americans were encouraged that beef prices were off the highs of a few years ago when overall supply was down, Croad said.
Americans loved their beef and were now finding it more affordable as well as having a new red meat healthy perception.
“So, the demand is better than everyone thought it would be.”
Added to the positive US market dynamics, solid demand for prime beef around the world was also helping NZ exporters diversify frozen beef supply away from Japan to avoid the tariff hike on imports there up to the end of March, Anzco Foods chief executive Peter Conley said.
That was also ahead of the expected boost in livestock supply as cattle finally started to reach processing weight.
He described all markets as stable with China kicking along positively and customers there already planning for the Chinese New Year demand early next year.
Conley said the US market remained the one to watch to see how the season panned out in terms of its ability to influence overall pricing. Demand for beef was rising there but there might also be some speculative element to the recent firmer pricing.
Anzco was the biggest NZ beef exporter to Japan but most of what it sent there was chilled and that part of the market was not subject to the sharp tariff increase.
As well, the company’s operating model in Japan meant it traditionally held more frozen inventory in the market rather than continually supplying from NZ.
That meant it had more inventory there when the tariff increase was imposed.
“We are still making sales though we won’t get through to the end of March with what’s there and it would be better if we could be refilling the pipeline.”
Japanese market demand was at good levels and so far importers appeared to be recouping the higher tariff costs on what frozen supply was coming from NZ.
Anzco also operated two restaurants in Tokyo, supplied with chilled beef, and was very close to opening a new restaurant in Singapore.
That was a good, high-end market for both beef and lamb, Conley said. The new restaurant replaced a previous facility that was not as well-located.
