New Zealand beef export receipts are expected to pass the $4 billion mark this season for the first time.
Beef + Lamb New Zealand's mid-season update for 2019-20 forecast beef, lamb and mutton farmgate prices to maintain their high levels, by long-term historical standards, supported by a strong start for the first half of the season and an expected weakening of the New Zealand dollar.
While drought and Covid-19 both had impacts for farmers and meat processors, the fundamentals were likely to remain strong for exports this year, B+LNZ chief economist Andrew Burtt said.
Receipts for beef and veal, and lamb and mutton (including co-products)were forecast to total just under $9 billion.
Beef export receipts were forecast to lift 18 per cent to $4.6 billion while a lift in the average export value for lamb offset a lower lamb crop in 2019, resulting in a 4 per cent lift in total lamb export receipts to $3.54 billion.
The Covid-19 outbreak disrupted an "incredibly strong start" to the 2019-20 season, the update said.
Chinese demand was severely curtailed during the second quarter and the toll of the virus in both Europe and the US would impact demand for red-meat exports for the remainder of the season. Significant short-term volatility in market demand and prices was expected.
However, demand fundamentals from China remained solid and the shortage of pork, due to African Swine Fever, was expected to underpin a recovery of demand for New Zealand sheepmeat and beef exports.
The US was forecasting a significant lift in beef exports and had gained improved market access to China and Japan, although US exports had been significantly impacted by Covid-19 due to the closure of meat-processing plants.
That might increase competitive pressure for New Zealand beef in some markets but had the potential to create opportunities in others, the update said.
A significant reduction in Australian sheepmeat and beef production would provide some support for demand for New Zealand red meat in key markets in 2020.
Average weighted farmgate prices for 2019-20 remained near historical highs despite disruption by Covid-19 and widespread drought.
Prices reached record highs in the first half of the season, providing a strong foundation for a weaker second half as the disruptions of Covid-19 and drought weigh on farmgate returns.
The combined challenges of the pandemic and drought had made the 2019-20 season an "extremely challenging one" for farmers.
Throughout Covid-19, the red-meat sector had proven "remarkably resilient", it said.