Barber’s Wire: Exports down despite lower dollar and outlook not great

Beef + Lamb NZ (B+LNZ)’s Economic Service has analysed meat exports for the first six months of the 2015/16 season and the figures show what might have been anticipated. The weaker New Zealand dollar did not decline enough to compensate for lower beef shipments and a fall in the overseas market prices for both beef and sheepmeat, writes Allan Barber.

Beef shipments were down 3.7 percent while the value fell 6.1 percent, although the entire drop happened in the second quarter; chilled beef exports were well ahead of the first quarter twelve months earlier with sales to North Asia showing a 55 percent increase. Exports to China and Taiwan were responsible for a 24 percent  increase to North Asia for the six month period as a whole. The overall decline was almost entirely due to lower tonnage and value of frozen beef exports, particularly to North America.

Lamb export tonnage rose by 5.9 percent because of the early processing season with sales to North Asia and Europe rising by 11 percent and 7.2 percent respectively, with the increase attributable to chilled lamb which represented 29 percent of total tonnage compared with 27 percent a year earlier. The average value of lamb fell by 4.2 percent, but this was cushioned by the weaker dollar by about 10 percent.

Mutton shipments were slightly ahead of the previous year, although the average value was down by 10 percent, with all regions showing a weaker trend. North Asian exports were well down, but this decline was offset by increased sales to Europe, South Asia and North America.

The total value of meat exports was 4.4 percent down on the previous year with the total tonnage marginally up, the difference being due to the fall in market prices cushioned by the weaker New Zealand dollar.

The outlook for the second six months does not look as favourable as the first half for several reasons: the volume of chilled lamb will be down considerably with no Christmas or Easter trade, prices have fallen across the board since the end of 2015, and the total lamb kill will be approximately 1 million down on last season in spite of the larger than usual pre-Christmas processing volumes.

The word out of the far south suggests this will not be a vintage profit year for the processing and exporting sector, so for the time being at least the figures for the first six months may be about as good as it gets. A rise in global market demand and a further drop in the value of the New Zealand dollar will be necessary components of any improvement.

Allan Barber is a meat industry commentator. He has his own blog Barber’s Meaty Issues and can be contacted by emailing him at allan@barberstrategic.co.nz.

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