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Home / The Country / Listen

Softening returns for NZ red meat exports in 2021 – Rabobank

The Country
24 Nov, 2020 11:30 PM4 mins to read

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Content brought to you by Rabobank

Reduced global demand for higher-value beef and lamb cuts in the year ahead will see New Zealand farmgate prices for beef and sheepmeat drop from the record highs experienced over recent seasons, according to a new report by Rabobank.

In Global Animal Proteins Outlook 2021: Emerging from a world of uncertainty, Rabobank said a slow and uneven recovery in the international foodservice sector, combined with weak global economic conditions, will reduce demand for higher-value New Zealand red meat cuts such as prime beef and lamb racks.

Rabobank animal protein analyst and report co-author Blake Holgate said, while lower demand for premium cuts would negatively impact export returns, farmgate prices for New Zealand beef and sheepmeat were not expected to drop significantly below long term averages.

"We anticipate solid demand for NZ beef out of the US – particularly for manufacturing beef – and China will underpin returns for New Zealand exporters in 2021," he said.

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Robust Chinese demand would also play a key role in holding up New Zealand sheepmeat prices in the coming year, as would strong global retail demand and tight lamb supply in both New Zealand and Australia, Holgate said.

The report said New Zealand's beef production would remain flat in 2021 while the long term trend of declining New Zealand sheep supplies would continue.

"The downward trend in New Zealand lamb supplies is forecast to continue for the 2021 season, with poor climatic conditions earlier in the year having impacted stock numbers and lambing percentages in many regions," Holgate said.

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Rabobank animal protein analyst Blake Holgate. Photo / Supplied
Rabobank animal protein analyst Blake Holgate. Photo / Supplied

Global animal protein production forecast to rise

On the global front, the report said 2021 will signal a return to animal protein production growth driven by the recovery of China's pork production.

"African swine fever (ASF) remains the biggest change driver in global animal protein, and in the year ahead we expect to see pork production grow faster than any other species, largely because of the recovery from ASF in China and Vietnam," Holgate said.

According to the report, production in the global poultry, aquaculture and beef sectors was also forecast to grow, while wild-catch seafood production was expected to decline.

"Beef production should return to modest growth in 2021, led by increased output from North America and Brazil," Holgate said.

"Taken in aggregate across all the species, the return to growth in 2021 will represent a significant change from the past two years, even though it will not make up for the losses."

Listen to Jamie Mackay interview Blake Holgate on The Country below:

Key opportunities

In addition to the ASF recovery, the report identified a range of issues affecting global animal protein that created areas of opportunity and risk for sector participants in 2021.

Key among these were global animal protein trade and the pace of Covid-19 recovery.

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"China's pork, poultry, beef and seafood imports are respectively estimated to account for about 45 per cent, 10 per cent, 25 per cent and 10 per cent of global trade in 2020 and it has been using this market dominance to drive down import prices," Holgate said.

Brexit was also shaping up as a key trade issue.

"With the UK and EU yet to finalise a new trade deal, some of the post-Brexit scenarios include a potential surplus of pork and beef in the EU, an increase in meat prices in the UK and a new sizable, high-paying destination for animal protein exporters around the world."

The report said all of the major animal protein species had been disrupted by the Covid-19 pandemic and identified several dimensions of change which will define the shape and speed of the recovery.

"These include accelerating trends – such as reduced labour availability and the rise of e-commerce – as well as trend reversals – such as a shift to a sales focus on local consumers rather than exports – and the impacts of the economic downturn," Holgate said.

"Changes to business strategies will also impact the recovery and, given the events of the past nine months, we expect to see businesses increasingly focused on building resilience, investing in agility and building trust, with workers, regulators, suppliers and consumers."

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