Dairy commodity prices have shaken off the past year's uncertainty, entering 2021 with a strong price trajectory.
A new report from Rabobank says reduced global demand for higher-value beef and lamb cuts in the year ahead will see New Zealand farmgate prices for beef and sheepmeat drop from the record highs experienced over recent seasons.
In the bank’s flagship annual outlook for the meat sector, Global Animal Proteins Outlook 2021: Emerging from a world of uncertainty, Rabobank says a slow and uneven recovery in the international foodservice sector, combined with weak global economic conditions, will reduce demand for higher-value New Zealand red meat cuts such as prime beef and lamb racks.
Report co-author RaboResearch animal protein analyst Blake Holgate said while lower demand for premium cuts would negatively impact export returns, farmgate prices for New Zealand beef and sheepmeat were not expected to drop significantly below long-term averages.
“Reduced demand for higher-value cuts will pull New Zealand beef export returns back from the record highs of quarter four last year, however, we anticipate solid demand for NZ beef out of the US – particularly for manufacturing beef – and China will underpin returns for New Zealand exporters in 2021,” he said.
“Robust Chinese demand will also play a key role in holding up New Zealand sheepmeat prices in the coming year, as will strong global retail demand and tight lamb supply here and in Australia.”
The report says New Zealand’s beef production will remain flat in 2021 while the longterm trend of declining New Zealand sheep supplies would continue.
“The country’s beef production in 2021 is expected to remain at similar levels to this year with climatic conditions and farmgate pricing poised to determine if production is above or below 2020 levels,” Holgate said.
“The downward trend in New Zealand lamb supplies is forecast to continue for the 2021 season, with poor climatic conditions earlier in the year having impacted stock numbers and lambing percentages in many regions.”