African swine fever has the potential to cause waves in global meat trade, which will flow through to the New Zealand
beef market, according to Rabobank’s latest global Beef QuarterlyBeef Quarterly report.
The Q4 Rabobank Beef Quarterly says the continued spread of African swine fever (ASF) through China’s pig population is
resulting in increased slaughter, transport bans and volatile prices.
The report says ASF continues to spread across China, with more than 60 confirmed cases up to November 19 scattered
across all the major pork-producing provinces.
“While the majority of cases are in small-sized farms, several larger-scale farms have also been impacted. Given the
sheer size of production and the fragmented structure, it will be a great challenge for China to control the disease
spreading in the coming year,” it says.
Rabobank animal proteins analyst Blake Holgate says while a decline in China’s pork production is clear, Chinese pork
consumption is also expected to drop, giving rise to increases in the consumption and import of other animal proteins,
including eggs, poultry, beef, mutton and seafood.
”Beef is not a major substitute for pork, however the pork supply shortage in China will likely also push up beef
consumption. Given China is already an important and growing importer of beef, depending on how pork production and
prices develop, there could be increased demand from China for beef imports over the coming months,” he said.
“New Zealand has significantly increased beef exports to China in recent times – exports jumped 34 per cent in volume
and 38 per cent in value during the 2017/18 season – and is well placed to supply China should there be any increase in
demand for imported beef.”
Other highlights of the global Beef Quarterly include:
New Zealand prices facing downward pressureNew Zealand prices facing downward pressure
Domestic cattle prices have dropped consistently since mid-September on the back of declining demand from the US. While
the weakening NZD against the USD has helped mitigate some of the negative impact on New Zealand farmgate returns,
prices still took a hit between early August and November.
Rabobank expects prices to face further downward pressure for the remainder of 2018, and into early 2019, as the New
Zealand cattle slaughter begins to gain pace against the backdrop of weaker US demand. To limit the extent of any price
declines, exporters will be looking to redirect increasing volumes of product into China, where the short-medium demand
outlook remains positive.
Beef production for the coming 2018/19 season (Oct-Sept) is forecast to be down 3 per cent. Export volumes from New
Zealand should decline marginally over the next 12 months. While national herd numbers will remain stable, New Zealand’s
cow slaughter is expected to be lower than in 2017/18, when the culling of a maturing New Zealand dairy herd led to an 8
per cent lift in overall beef production.