Relief as US wharf strike ends

A return to normal trade flows is expected to take several weeks after the strike hit ports such as Seattle. Photo / AP

Meat producers, already facing drought in NZ, welcome return to lucrative American trade.

Resolution of industrial action at ports along the West Coast of the United States has come as a relief to New Zealand meat producers who have been shut off from an important and lucrative market for more than a month.

A return to normal trade flows is expected to take several weeks after the month-long strike, which was resolved last week.

The dispute could not have come at a worse time for New Zealand meat producers at the peak of the season, with greater-than-normal volumes coming from drought-affected farms throughout much of the South Island and from parts of the North.

For beef producers, the United States is the biggest and most lucrative market.

The strike has disrupted US exports as well, with less US dairy production finding its way on to markets.

"Conversely, it now frees up US exports from a dairy perspective, so more product will start to flow from dairy," said Rabobank's director of dairy research, Hayley Moynihan.

Alliance Group general manager (marketing) Murray Brown said the drought meant that 20 per cent more beef was being put through the works than at this time last year.

Extra supply pressure was also coming from Australia, which was also experiencing higher kill rates for both beef and lamb.

"It could take eight to 10 weeks before the ports are really cleared," Brown said.

"That has slowed the ability of New Zealand and Australia to get product back into the market, so it has had a significant impact on beef prices -- about 20 per cent in the last two or three weeks."

Brown said the outlook for beef was still positive and he was confident that prices would rebound once trade flows return to normal.

About 10 per cent more lamb was coming to the works than this time last year, because of the drought, and lamb weights were also down.

Prices have fallen by about 7 to 9 per cent since October-November.

There was significant competition coming from Australia and an inventory backlog in China was depressing prices, Brown said.

In Europe and the United States demand for lamb was static, while in the oil-producing countries it was soft.

Much of New Zealand is drier than normal for this time of the year.

Big areas of severely drier-than-normal soil moisture persist in the Waikato, southern Taranaki, Wellington, Wairarapa, Hawkes Bay, Gisborne, Bay of Plenty, Auckland and Northland regions, according to weather agency Niwa.

For the South Island, soil moisture levels remain much drier than normal for most east coast locations. Severely drier-than-normal soil moisture levels remain in parts of drought-declared regions of Otago, Canterbury, and Marlborough.