Two things have happened in the beef export market this season.
“We have seen an incredible increase in demand from China and that has clawed manufacturing beef, which is dairy bull beef and dairy cows, away from the US.
“As a result the reliance on the US market has reduced.”
Since October Chinese imports are up 49,000 tonnes on the previous season.
In the whole of last season Chinese imports were only 17,500t.
Improvements in the discretionary incomes of Chinese consumers have driven up consumption of beef, which, in the past, was considered a luxury item.
A looming pork shortage caused by the African swine fever epidemic has also encouraged Chinese wholesalers to stock up on beef in anticipation of a hike in retail beef prices.
Strong demand from China has NZ exporters favouring that market.
“In fact, 49% of NZ beef exports in June went to China.”
That equates to 26,000t of NZ beef, well up on the 12,000t that was shipped to China in June last year.
Total NZ beef exports for June were slightly less than last year at 52,800t, down 1032t or 2%, meaning some longer-established markets lost out.
In particular, there was a 50% drop in June beef exports to the US.
“Up until this season the US always secured the lion’s share of NZ beef, however, trade dynamics are quickly changing,” Croad said.
“China’s move into the NZ manufacturing beef market has increased the competitive tension with the US, who until recently had this market solely to themselves.
“The upside of this is that US imported beef prices have held well this season and are 14%-16% above year-ago levels.
“This is due to less manufacturing beef entering the US and the need to remain competitive with China.”
Imported 95CL bull is trading at $2.43/lb while 90CL cow prices are $2.22/lb.
June export statistics show only 10,000t of manufacturing beef was exported to the US market from NZ, which is 12,000t less than the five-year average.
High Chinese manufacturing beef prices mean June exports to China and Hong Kong surpassed the traditional US market.
In total, NZ shipped 11,000t of manufacturing beef to China and Hong Kong in June.
Typically, the US market relies on NZ and Australia to supply lean meat to balance out the fattier feedlot beef in burger patties.
While the US has been receiving plenty of beef from Canada and Mexico this year, very little of it is lean enough to substitute NZ and Australian manufacturing beef.
“If the US chooses to remain competitive with China it will bode well for farmgate manufacturing beef prices,” Croad said.
