Red meat exports slump, thanks to China
Weaker pricing and demand from China continue to impact New Zealand red meat export earnings.
China's sway over what New Zealand dairy farmers get paid for their milk has been on display this year.
Dairy prices on Global Dairy Trade (GDT) have tumbled in recent months as the Chinese Government again locked down cities as part of its zero-Covid policy.
However, the latest GDT event broke a run of three consecutive price falls: the price index rose 2.4%, while key whole milk powder (WMP) prices posted a 3.1% rise.
Overall and WMP prices remain down 18% and 19% respectively on the same time a year ago.
Westpac senior agri economist Nathan Penny says the positive result follows an easing in Covid restrictions in China.
He notes that Chinese dairy demand had been progressively weakening over the year on the back of the soft Chinese economy.
"However, the loosening of Covid restrictions recently may signal a more pragmatic approach to Covid being adopted by Chinese officials."
When the Chinese economy is booming, NZ dairy farmers tend to benefit.
Penny expects the Chinese economy to grow by 6% over 2023 from a soft 3.5% over 2022.
He says this pickup in the Chinese economy and looser Covid restrictions should translate into improved Chinese dairy demand over the year ahead.
But ASB economist Nathaniel Keall believes dairy prices won't fully recover until the Chinese economy picks up. "We don't expect prices to make a more sustained recovery until that Chinese demand comes back - and that doesn't look imminent."
Keall notes that alongside ultratight global supply, aggressive purchases by China helped fuel the massive gains in dairy prices seen over early 2021.
This largely kept them high over the first part of this year, so the subsequent absence of strong Chinese demand has been sorely missed.
"As we've highlighted over numerous publications, the lack of Chinese demand is being driven by a softer domestic picture: a strict anti-Covid regime and slowing economic growth more broadly have meant the outlook for household consumption in China has weakened considerably."
ASB recently revised its forecast milk price for the season from a $10/kgMS to $9.40/kgMS.
Westpac is forecasting $8.75/kgMS for this season and $10 for the following season.
South Waikato farm manager Ben Purua’s amazing transformation from gang life to milking cows was rewarded with the Ahuwhenua Young Maori Farmer award last night.
Bankers have been making record profits in the last few years, but those aren’t the only records they’ve been breaking, says Federated Farmers vice president Richard McIntyre.
The 2023-24 season has been a roller coaster ride for Waikato dairy farmers, according to Federated Farmers dairy section chair, Mathew Zonderop.
Ministry for Primary Industries (MPI) director general Ray Smith says job cuts announced this morning will not impact the way the Ministry is organised or merge business units.
Scales Corporation is acquiring a number of orchard assets from Bostock Group.
Family and solidarity shone through at the 75 years of Ferdon sale in Otorohanga last month.
OPINION: Scientists claim to have found a new way to make a substitute for cow's milk that could have a…
OPINION: The Irish have come up with a novel way to measure cow belching, which is said to account for…