Beef + Lamb New Zealand’s (B+LNZ) Economic Service team produces monthly Red Meat Export reports data obtained by the New Zealand Meat Board. The Economic Service reviews the volume and value of New Zealand beef and sheepmeat exports to keep industry informed and to feed into industry policy advice. Here are the key takeaways from the December 2021 report.
The 2021–22 red meat export season started on a high for exporters and producers. First quarter (October 2021 to December 2021) export and farmgate prices were higher than historical trends, supported by solid demand and supply fundamentals in New Zealand’s key overseas markets, particularly China and the US. The exchange rate has also shifted in favour of exports, allowing the positive in-market sentiment to flow into exporter and farmer returns.
The month of December was a highlight for export performance with the average export value of both beef and lamb exports reaching all-time record highs. With export volumes similar to historical levels, the lift in export value can be attributed to unprecedently high market demand. Demand from the US and China is driving current high returns for sheepmeat and beef. Both markets experienced strong economic recovery in 2021 following the economic shock from the pandemic in 2020. Combined, these two markets accounted for 70% of total New Zealand beef and sheepmeat exports in 2020–21.
Key drivers include:
- Economic recovery in key markets following the pandemic. Global governments have rolled out significant financial stimulus packages to support economies. Money supply has increased and consumers have more to spend. Consumer demand for food has surged. Inflationary pressure is now a factor in many global markets, with meat experiencing some of the sharpest rises.
- Strong demand from China driven by solid economic growth in 2021 and a shift in consumer preference towards beef and sheepmeat following deficits in pork supplies due to African Swine Fever (ASF). Even as the Chinese pig herd recovers from ASF and pork supply increases, beef and sheepmeat, to a lesser degree, are expected to remain part of the Chinese consumer diet.
- Against a backdrop of tighter global supply of beef and sheepmeat the surge in consumer demand has resulted in record high returns for NZ exports.
Global demand for beef can be described as red hot. Market fundamentals are aligned for beef exporters with tight beef supply and strong global demand.
Australian beef production was limited in 2021 as beef producers focused on rebuilding herds on the back of favourable climatic conditions. Brazilian beef production was also down in 2021, driven by strong demand from China preventing heifer retention. Brazilian beef exports were also disrupted by when exports were suspended due to the discovery of BSE in two cattle in the second half of the year. Argentina’s government suspended beef exports to non-quota markets for a period as the country attempted to resolve domestic meat price inflation. In contrast, and interestingly, US beef production reached record levels in 2021, however was not enough to outweigh the strength of global demand combined with the decrease in production from Australia and South America. Meanwhile, Canada re-gained access to South Korea after bans that had been imposed when that country confirmed BSE in 2003 were lifted.
The average export value for beef reached a record high in the month of December; up 32% year-on-year, 8% month-on-month and 27% on the five-year average. While volumes were down year-on-year, which reflected very high volumes in 2020, they were 9% higher than the five-year average. Export receipts for the month increased 24% year-on-year.
China accounted for 51% of beef exports in December, up from 44% in December 2020. The average export value of beef exports to China lifted 29% year-on-year and 14% month-on-month.
The US accounted for 27% of beef exports in December. The average export value lifted 40% year-on-year and 6% month-on-month. Chilled beef exports to the US lifted sharply in December; up 56%. There was also growth in chilled beef exports to China, with volumes up 10%.
Global demand for sheepmeat benefited from the surge in consumer demand for meat in 2021. Tight global supply was also a feature of the sheepmeat market in 2021. Australian production was down as producers focused on rebuilding flocks, and US production was restricted by drought in key sheep producing states.
The average value of total lamb exports in December reached a record high, lifting 31% year-on-year, 4% month-on-month and 27% on the five-year average. Export receipts for the month lifted 32% year-on-year.
Growth in demand for lamb imports from the US was a highlight of the first quarter of the 2021-22 season. The volume of New Zealand lamb exported to the US lifted 19% compared to the same quarter in the 2020–21 season and the average export value lifted 36%. The average export value in December was particularly strong, lifting 53% year-on-year and 15% month-on-month. The US accounted for 12% of total New Zealand lamb exports in the first quarter of the season, up from 8% the previous season.
China is the largest market for New Zealand lamb exports accounting for approximately 45% of exports in the first quarter of the season and the month of December. The average value of lamb exports to China in December lifted 21% year-on-year and 29% on the five-year average.
Average export values to the UK and EU-27 also lifted year-on-year (28% and 20% respectively) and both were 20% above five-year averages.
The volume of chilled lamb exports declined 23% year-on-year, reflecting the risk involved with chilled shipments amid the current disruption in global freight. However, the average value of chilled lamb exports lifted 47% reflecting both the lower volumes, but also a very strong market in the US, EU-27 and UK for chilled product.
Mutton continues to be in strong demand from China, which accounted for 88% of total New Zealand mutton exports for the first quarter of the 2021–22 season and the month of December. The average export value of mutton was up 20% year-on year in December and up 29% on the five-year average.
About B+LNZ’s Economic Service
The B+LNZ Economic Service has been in operation for 70 years.
Its role is to provide independent, authoritative and credible Information for the sector to help inform policy and trade decisions. To do this, the Economic Service carries out an annual survey of Sheep and Beef Farms where we collect about 2000 pieces of data off each of 530 farms.
In addition, the Economic Service maintains information for policy work and to generate forecasts of income and production, databases of key statistics like:
- New Zealand’s official livestock numbers (which are published by Statistics New Zealand) by district that can also be grouped into production regions, island and New Zealand to show trends and forecasts;
- meat processing and production;
- the volume and value of monthly meat and wool exports by country.
Results from the above are published at key times – starting in July with the Stock Number Survey, which is a survey of the productive base of livestock, in September a comprehensive New Season Outlook is released, at the end of lambing the Lamb Crop Survey, and a comprehensive Mid-Season Update in March, and the cycle repeats.