October 25, 2006

Rising grain prices to boost NZ grass-fed beef exports

Soaring grain prices could be a boon for New Zealand's beef exports, which come from grass-fed cattle, unlike US and Australian beef, said Trade Minister Phil Goff.

They provided a competitive advantage for the New Zealand grass-fed product, remarked Goff pointing out that more expensive grain was pushing up the price of grain-fed beef.

About 98 per cent of New Zealand beef came from grass-fed cattle, while the bulk of US, and more increasingly more Australian cattle, were fed on corn, wheat, barley and sorghum.

World grain prices have been rising, led by a rally in wheat, as concerns about supplies deepened. Those concerns followed Australia forecasting this month that drought meant its wheat this year would be less than half that of the previous season.

Wheat futures at the CBOT marked a 10-year high above US$5.50 a bushel this month, while corn futures hit a two-year high at over US$3.10 a bushel.

New Zealand became a major beef exporter to Japan after Tokyo banned US beef imports in December 2003 following the first US case of mad cow disease.

The country exported 38,000 tonnes of beef to Japan in the production year that ended in September last year, constituting about 10 percent of Japan's share for imported beef.

Despite resumption of US beef imports, New Zealand would continue to be a major supplier to Japan as the country claimed its product was in line with safety standards including free from diseases.