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Vol 19 No 1, January 13, 2020
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farmersweekly.co.nz
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Meat blip no crisis Nigel Stirling
T
nigel.g.stirling@gmail.com
HE sudden bout of weakness in the Chinese market at the end of last year was to be expected after a rapid run-up in prices in the previous six months, meat exporters say. Exporters reacted swiftly to a 15-20% drop across all sheep meat and beef categories in the two weeks before Christmas with cuts to schedule prices and the revaluation lower of inventories. The sudden drop left Chinese importers scrambling to renegotiate contracts while some refused to pick containers up from the wharves. Anzco sales and marketing general manager Rick Walker expected prices to dip after the last ship carrying meat for consumption in Chinese New Year sailed in the middle of December. About the same time, however, Chinese authorities began
to release 190,000 tonnes of pork from state reserves while encouraging increases in local production, all in an effort to rein in sky-high prices ahead of the holiday celebrations later this month. Pork prices, after more than doubling in the year to the end of November, helping to push Chinese consumer inflation to a seven-year high, fell by 16% in the second half of December. The fall flowed through to imported sheep meat and beef prices, Walker said. Beef prices came under the most pressure after reaching very high levels in the second half of last year. “It would be foolish of anybody to expect the massive rises we saw over the last two to three months to be sustainable. “We think there will be a softening and a new plateau post Chinese New Year. “And that plateau is still going to be a very solid price when compared to historically.” Silver Fern Farms chief executive Simon Limmer said
Lamb cuts sold into China (NZ$/kg)
Lamb cuts sold into China (NZ$/kg)
15 10 5
0 Jan-16
Jan-17
Flaps
Jan-18
Jan-19
Forequarters
Jan-20 Source: AgriHQ
while prices in China for sheep meat have slipped back to levels last seen six months ago they were historically high prices. “Six months ago we were celebrating those prices because across the five-year trend they were pretty strong still and then we just got into the stratosphere and obviously that has been corrected.”
It would be foolish of anybody to expect the massive rises we saw over the last two to three months to be sustainable. Rick Walker Anzco Limmer said the chronic pork shortage caused by the devastation of China’s pig population by African swine fever would continue to provide a floor under sheep meat and beef prices for the foreseeable future as it had done before the recent bout of weakness. “My assumption would be that the underlying demand in China remains strong and while they are releasing more pork inventory into the market I am not sure that problem is resolved. “They have a longer-term scenario that they are going to have to deal with.” China’s response so far has been to throw open the doors to imports.
STILL GOOD: Prices for sheep meat from ewes like these sold at Matawhero on Wednesday might have come back but are still at historically high levels, Silver Fern Farms chief executive Simon Limmer says.
In the past year it has granted new access to 340 meat processing plants from Europe to South America. The increased purchases of American agricultural products China agreed to as part of its recent tentative trade deal with United States President Donald Trump is bound to include
pork and beef. Walker said that should not worry NZ farmers. “All that means there will be more people competing for the opportunity that exists in China but our view is that the opportunity remains significant and there will be enough room for everyone.”
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