A benchmark for New Zealand beef exports rose 5.1% last week although increasing US domestic production is likely to cap the gains, according to analysts at NZX Agri.
The US price for 95CL (bull) beef, the raw ingredient for burger patties, rose to US$2.07 a pound from US$1.97/lb in the previous week and up from about US$1.92/lb at the same time a year ago. The price is still about 10 cents/lb below its five-year average.
“The US beef market is still under pressure from increasing domestic production, which is expected to keep a lid on imported prices,” AgriHQ analyst Rachel Agnew said. “For this reason, most reports suggest that the rising market will be short-lived and we may see prices stabilise toward the end of January.”
Exporters are having to contend with a New Zealand dollar that has strengthened from its lows of late December, reaching US0.7239 today, close to a two-month high. The kiwi has gained 11% in the past 12 months. In that time it has soared 28% against the British pound, partly driven by the UK’s Brexit vote, and adding to headwinds for exports of lamb.
The benchmark price of a leg of lamb in the UK was unchanged at £0.4350 a kilogram last week and has climbed 28% in the past year.
“Inventories remain very low and with markets aware supply will be tight again through 2017, customers are eager to secure product now,” Agnew said. “While production has increased through December and January, lamb supply is well down season to date.” She said demand for chilled lamb for the Easter season was likely to underpin farmgate prices, which may hold at around $5/kg in both the North and South islands.
Meat and edible offal exports fell 32% in November from a year earlier, according to Statistics New Zealand data released last month. Meat exports fell 12% to $6 billion in the 12 months through November, ranking second to dairy exports at $11.1 billion.