September 7, 2004

 

 

Beef Shortage Pushes World Prices To 18-Year High

 

A shortage of beef caused the world beef price to surge almost 5 per cent last month to an 18-year record high, according to latest figures by New Zealand's ANZ Bank.

 

The bank's commodity price index issued yesterday shows prices increased again in August, for the 14th month in a row, though the rise was just 0.9 per cent.

 

In New Zealand dollar terms, the strong Kiwi dollar took the gloss off rising world prices, leaving the index down 0.3 per cent but up almost 16 per cent in just six months.

 

The gains in world commodity prices in August were ahead of latest Statistics New Zealand figures for July, which were issued on Sunday and showed exports worth $2.4 billion in the month ¨C up 7.5 per cent on the same month last year.

 

The main reasons for higher exports in July were frozen boneless beef cuts and edible offal, large aircraft, and sawn timber.

 

Meat and edible offal exports in July were worth $368 million in July. The figure is up almost 21 per cent and well ahead of dairy product sales. While monthly export figures can move around, meat and meat product exports in the past three months were worth $1.3 billion, higher than dairy products, which are usually the top export sector.

 

Better meat and timber sales were offset by lower values for ships, boats, milk powder, butter and cheese. Dairy product sales were down almost 10 per cent in July, at $268 million.

 

Statistics NZ figures gave an updated trade balance of $389 million deficit for July.

 

The official figures also indicate some pain for exports to Australia, which were down almost 12 per cent to $530 million in July, though they were largely flat for the year.

 

The Kiwi dollar has been rising fast against the Australian currency recently, going close to A94 cents yesterday, well up from last year and around its highest in nine years.

 

In contrast, total exports to Japan and China were up strongly.

 

Meanwhile, world commodity prices are up more than 24 per cent in the past year and some commodity prices have been hitting record highs in recent months, with some expectation that prices would start to steady.

 

But beef prices rose strongly and unexpectedly last month, driving the world index even further.

 

Beef supplies are tight in the United States and Australia, which is still recovering from drought. The continued ban on Canadian beef export prices was also pushing up prices.

 

US beef supplies are expected to remain tight till at least 2006 and beyond. However prices may change when Canada starts exporting beef again to the US, following the BSE outbreak there last year.

 

World beef prices are up about 40 per cent in 12 months.

 

Lamb prices also nudged higher, up 1.2 per cent in August in world price terms and prices are now higher than during the British BSE outbreak in 1996.

 

Prices were up strongly for venison, increasing 7 per cent in the month.

 

Dairy prices held at their highest levels for eight years.

 

"Commodity prices continue to confound expectations," ANZ Bank said.

 

However, commodity prices were believed to be near the end of the rising cycle and would soften next year as global economic growth slowed down and more supplies became available.