Beef prices continue to defy gravity as fewer shipments leave shorelines to key export markets.
New Zealand's beef exports rose 22 per cent in value in the final quarter of the year compared with the 2020 quarter, while total volumes were back 10 per cent.
The dollar value was up16 per cent for beef going to the United States, but dropped 15 per cent in volume, while values rose by a third even though exports to China were unchanged.
Japan exports were also static, but values rose 39 per cent and Korea values jumped 37 per cent as volumes increased 8 per cent.
Rabobank says this bodes well for the first half of the year and farmers can expect farmgate bull prices to remain above the five-year average.
Agricultural analyst Genevieve Steven said the beef outlook for the year was positive.
"There are really tight global supplies of beef and farmers are still enjoying elevated farmgate pricing. The key thing driving this pricing situation are really strong global demand for beef and tight supplies."
The North Island bull price was last month at $5.90 a kilogram carcass weight, which was 86 cents/kg above the five-year average.
This follows the bull and cow kill reducing 13 per cent alone in the South Island in the fourth quarter with dairy farmers likely keeping cows because of high dairy prices, while a dull Spring played a part in lower production.
Internationally, Argentinian production is expected to rise 5 per cent, but that's coming off a 20-year low.
That follows its government earlier putting in export restrictions to make domestic beef more affordable and available to its population after high inflation.
Brazil is also back on deck, but Chinese restrictions remain after it lifted an embargo on its beef following reports of two Mad Cow Disease cases.
Furthermore, the United States was still trying to liquidate its cow herd because of price and cost of production pressures and the Australian rebuild of its herd continued, said Steven.
"The forecast for the US feedlot cattle production is back 2.5 per cent on last year and the whole Australian and US production is really underpinning that global hole."
The level of demand was illustrated by the US paying more for New Zealand and Australian lean trimmings than its own 90CL cow trimmings, she said.
Rabobank agricultural analyst Genevieve Steven rates the beef outlook as positive as long as buyers do not baulk at higher prices. Photo / Supplied - Rabobank
Steven said the key risks to highlight included meat processing plants possibly struggling to operate at limited capacity because of Omicron cases rising and labour shortages.
That would drive up operating costs and impact farmgate schedules.
She said the global risk was consumer resistance to high prices.
"There is strong consumer global demand, but very high beef prices with high inflationary pressure around the world. For example in the US inflation in Q4 2021 was 7 per cent.
"The big question is at what point do we get an easing in global demand because families are feeling the price pressure in their pockets?"
US beef demand was fortunately mostly in mince form, so they might choose to eat less rather than close their wallets, she said.
She said shipping disruptions would continue.
"There's container congestion in all the wrong places in the world and little easing of container traffic is expected until 2023. It's a global challenge.
"For New Zealand exporters there will continue to be logistical challenges and increased costs associated with shipping."
