ASHBURTON - A shortage of beef cattle in the United States is providing a spin-off for New Zealand beef farmers.
Beef prices in the US have hit a six-year high of 118USc/pound (238c/kg) due to suppliers holding cattle back from slaughter in an effort to rebuild herd numbers.
Rob Davison, the Meat
and Wool Board's economic service managing director, said the price rise was positive for farmers because the US was the final destination for 65 per cent of beef exports.
Mr Davison said the increase was further underpinned by a strong US dollar, which favoured exporters.
The price rise was linked to the American cattle cycle, and prices were expected to be strong.
US cattle suppliers were retaining heifers to expand their herds, which in turn had tightened the supply of beef.
Mr Davison said that during the 10-year cycle, it was expected there would be six years of improving prices, and then four years of "market corrections."
The current good fortune for farmers should continue for the next 12 to 24 months, peaking in 2002.
The past three or four years had been bad for farmers, but current prices of 285c/kg to 300c/kg were producing economic returns, and should remain for the next two years.
Farmers had experienced a good grass season and on top of this the New Zealand dollar was still hovering around 50USc.
However, higher beef prices would also mean higher replacement stock prices.
The breeding cow kill had been high over the past two years due to low prices, and this year would see a big retention of beef heifers.
- NZPA
