9 Dec 2022

Beef, sheep meat prices tipped to fall as belts tighten offshore

1:13 pm on 9 December 2022
The weekly sheep sale at Gisborne's Matawhero Stockyards

Agricultural analyst Genevieve Steven warns the outlook for sheep meat pricing in 2023 appeared to be turbulent. Photo: Phil Smith

Prices for New Zealand beef and sheep meat are expected to soften further in 2023 as people tighten their spending.

Rabobank's Global Animal Protein Outlook 2022, Deciding How to Grow Amid Challenges and Opportunities, said high input costs were also expected to remain prevalent next year, potentially causing margin pressure for some businesses.

Agricultural analyst Genevieve Steven said sheep meat prices were likely to decrease more significantly than beef.

"Significant economic challenges in New Zealand's main export markets - China, Europe and the US - are expected to reduce demand for New Zealand's sheep meat exports, leading to softer sheepmeat prices.

"Lockdowns in China reduced demand for New Zealand sheep meat exports in 2022 and are likely to continue having a negative impact on demand in 2023, whilst the zero-Covid policy remains in place."

Steven said the recovery of lamb production in Australia would likely increase competition in key export markets.

The outlook for beef was slightly worse, with prices expected to ease in 2023.

"Chinese consumers face ongoing Covid lockdowns and tighter economic conditions, forcing some consumers to trade down to lower-priced proteins.

"On a positive note, US demand for lean beef trimming imports is expected to lift as US production enters negative territory. This should provide price support for New Zealand beef."

She said a weaker NZ dollar, US dollar outlook was also expected to support returns for beef exporters and should hold farmgate beef prices above the five-year price average in 2023.

However, Steven warned the outlook for sheep meat in 2023 appeared to be more turbulent.

In addition, the recovery of lamb production in Australia would likely increase competition in these destination markets.

And New Zealand's sheep and beef sector was also facing sustainability-related pressures, Steven said, that were likely to lead to structural changes in livestock numbers and production over coming seasons.

"These pressures include land-use change from grazing to forestry and the pricing of GHG emissions from agriculture. While these changes have not yet had a significant negative impact on livestock numbers, Rabobank forecasts afforestation will drive a decline in breeding ewe and beef cow numbers of 1 percent in 2023."

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