Headwinds are building for New Zealand exports of beef, the country's largest meat export, according to AgriHQ.
The outlook for beef prices is weakening in the US, the largest market for New Zealand beef, after a United States Department of Agriculture report showed cattle numbers at a nine-year high as farmers rebuild their herds following heavy culling in 2014 and 2015, with most of the increase in beef cows rather than dairy cows. Elsewhere, Japan has temporarily lifted the tariff on frozen beef from New Zealand, rival exporter Australia has increased supplies, and a rise in the New Zealand dollar is hurting margins, according to AgriHQ's monthly Sheep & Beef report for August.
"Sentiment in the US towards imported beef has turned negative, largely on the belief that US domestic prices will weaken in the next few months," AgriHQ analyst Reece Brick said in his report. "Importers are very reluctant to buy on the current market, with exporters reporting very limited interest over the past fortnight.
"This view is predominantly driven by weaker beef futures as well as production forecasts which paint a picture of increased supplies through the back-end of this year."
The price for 95CL imported bull beef dropped to US$2.27 a pound this month, from US$2.38/pound last month, according to AgriHQ data. The price for imported 90CL cow meat slipped to US$2.18/pound from US$2.20/pound. Still, prices remain above year-earlier levels with 95CL last year at US$2.25/pound and 90CL at US$2.10/pound.