October 5, 2010

New Zealand beef prices lift due to offshore problems

New Zealand beef farmers are profiting from global events such as the droughts in Argentina and the Russian ban on wheat exports, according to New Zealand Beef & Lamb chairman Mike Petersen.

Petersen said beef shipments from Argentina for the first seven months of this year fell by about half to 110,000 tonnes after the worst drought in 70 years, and because of government export restrictions. Ranchers sent a record number of animals to slaughter last year, with a lack of forage but export controls prevented prices from reflecting international values.

Meanwhile in August, Russia banned grain exports for the rest of the year after a severe drought and wildfires destroyed crops, sending the price of grain soaring hitting US beef producers.

Across the Atlantic, European beef production is plummeting as a result of a reform initiated by the Common Agricultural Policy, causing major supply shortages. "That's almost in freefall in Europe and so there's not enough beef in the European market," Petersen said.

Worldwide the situation remains the same, Petersen said. Consequently, farm gate beef prices have increased strongly to more than US$4kg, compared with a long-run average of about US$3kg. He expects the strong global demand to continue and this is likely to affect prices for local consumers as well.