September 29, 2003



US Quota Dampens Good NZ Beef Sales


Prices for New Zealand beef have rocketed over the past three months in the United States, but New Zeland's farmers have little to be thankful about that.


This is because exporters had used up much of this country's 214,000 tonne quota before prices began to surge in earnest. In part this was due to an unusually heavy cull of cows earlier this year by dairy farmers.


Higher slaughter rates had been forecast also, due to natural growth in the national cattle herd, and have been running around 12 per cent ahead of last year on a monthly basis. A severe drought in Australia, which lowered competition, also encouraged some processors to ship to the US earlier than usual.


Over the past three months US beef prices have risen from a season's low of US84.5 cents to US$1.15 a pound. This compares with US$1.04 at this time last year.


The lift in beef prices in the States is due to the single confirmed case of BSE in Canada in March. Americans subsequently banned all live cattle, beef and beef products from Canada, a major supplier of both frozen and live cattle.


Restrictions were relaxed somewhat on September 10. However, they still ban the imports of live Canadian cattle and fairly complex rules exist on other imports: for example beef must be boneless and from animals aged under 30 months. This is causing ongoing confusion for US importers.


At the same time, US imports are down sharply. Limited imports are coming from Uruguay, where a foot and mouth outbreak has ended; however imports from Argentina have been banned because of another outbreak there.


As a result, supply shortages have upped US domestic beef prices this week to record levels, augmented by a sudden switch in consumer demand towards beef.


Earlier he reported that American cattlemen, who were enjoying the price spike, were expressing concern at what would happen when the Canadians were allowed to resume imports.


The sudden surge in the Kiwi dollar this week has however levelled any gains in beef sales revenue from the US.


Exporters report that Asian markets have been reasonable, though activity has slowed lately due to holidays there.