2.3 Beef Cattle
Production and Trade
Provisional beef cattle numbers from the census of June 2002 were estimated at 4.48 million, down 6.4% on the estimate for the previous year of 4.67 million. By June 2007, total beef cattle numbers are projected at 3.76 million, with the reduction mainly due to declining beef prices.
Inspected beef and veal production for the year ending September 2003 is estimated at 583,000 tonnes cw, up 12% over the previous year. The summer/autumn drought in 2003 led to an earlier kill than usual. Production is forecast to peak at 589,000 tonnes cw in 2004, and then fall to 545,000 tonnes cw in September year 2008, as beef cattle numbers decline and lighter weight cull dairy cows make up a larger proportion of the total kill.
Export volumes for the year ended September 2003 are estimated at 478,000 tonnes cwe, and are projected to fall to 435,000 tonnes cwe by the year ending September 2008. The US remains New Zealand's most important beef market. In the year ended September 2002, the US took 193,000 tonnes product weight (pw) (60% of New Zealand's exports), of which 129,000 tonnes pw comprised manufacturing beef and veal. In 2001, access to the Canadian market was denied to South American countries suffering from FMD outbreaks there, and New Zealand's exports to Canada recovered as a result.
In the six months to March 2003, export were up 30% to 196,000 tonnes pw on the same period last year, and reflects increased slaughter of cattle in the March quarter due to drier than average conditions over many parts of New Zealand. In consequence, New Zealand's annual (calendar year) export quota to the US was 28% higher than the same period in 2002. Edible offal (or fancy meats) is not subject to quota restrictions and in September year 2002, exports to the US were 3,910 tonnes pw out of a total of 34,300 tonnes pw.
Prices
The US beef market is used as the basis for forecasting international beef prices. Prices for imported beef in the US rose steadily up to February 2002. However, they have declined since then, partly because of a severe drought which affected much of the US during 2002, and which led to increased cow and heifer kill and a temporary increase in supply. Herd rebuilding in the US is not expected to start until 2006.
Key expectations and trends that determine New Zealand export prices include the following:
- US choice beef prices are expected to recover from current levels, peak in 2005, and then fall cyclically as the cattle inventory increases
- following a recovery from low international prices in 1999, US pork prices are expected to peak in 2004, fall cyclically to 2008, rising again to 2011
- US poultry prices are expected to remain stable or drop slightly over the forecast period as consumption and exports rise
- a slight rise in US private consumption expenditure from 2003 is projected.
Cattle hide returns are an undifferentiated part of the schedule payment received by New Zealand producers. International hide prices peaked in April 2001 in response to rising demand for leather in Europe. However, excess supply then led to a build-up of stocks in tanneries and hide prices fell from May 2001 to February 2002. Thereafter, prices rose steadily to October 2002. In early 2003 prices remained generally stable, but slightly below the levels of the end of 2002. Demand for hides in Asian countries (Republic of Korea (ROK), Hong Kong, Taiwan, Japan and China), particularly for heavy Texas steer hides, picked up in January, following a lull during 2002. Overall, the prospects for New Zealand's cattle hide industry remain good over the medium term as Asian demand appears likely to continue.
US prices for New Zealand manufacturing cow averaged 224 US c/kg for the year to September 2002, up 8.7% on the previous year. Partly because of the stronger NZD, New Zealand beef producers sustained a 4.9% drop in the cow (M class 145-170 kg) schedule to 308 c/kg (or $488/hd) for the year ended September 2002. However, steer and heifer prices (P2 245.5-270 kg) rose by 3.4% to 375 c/kg (or $969/hd), reflecting higher value market returns compared to manufacturing.
Schedule prices for NZ beef remained roughly stable during January and February 2003, but declined steadily during March and April. Given the appreciating exchange rate and projected trends in cow prices, steer and heifer prices are forecast to decline sharply (from 375 c/kg to 280 c/kg) during the year ending September 2003. Further falls are projected to 236 c/kg by September year 2008.
Contact for further information:
David Lillis
Phone: (04) 498 9828
Email: david.lillis@maf.govt.nz
