New Zealand. Livestock and Beef Semi-Annual Report. Mar 2014 March 31, 2014
The success of the dairy industry in New Zealand continues to boost total cattle numbers, with the overall herd rising from 10.1 million head to 10.4 million head over the last two years. Calf and cow slaughter numbers overall are on a positive growth trend as a result. Total beef production continues to hover in the historical range of 600,000 to 640,000 metric tons. For 2014 beef production is forecast at 626,000 metric tons, up 6,000 metric tons (1%) relative to 2013 production. Exports are forecast at 524,000 metric tons in 2014 versus 529,000 metric tons in 2013. The meteoric rise in trade with China is forecast to level off in 2014 which should allow shipments to the US to be maintained at current levels of around 245,000 metric tons carcass weight basis. Strong forecast prices for U.S. beef imports from New Zealand will encourage this volume.
Base Cattle Inventory
New data from Statistics New Zealand shows the overall base cattle herd numbered 10.28 million head at the beginning of MY 2014 (Jan-Dec). This amounts to a 151,000 head or 1.5% upward revision since September 2013 forecasts, and resulted from continued growth in the national dairy herd. Beef+Lamb New Zealand (the levy funded producer representative body) is estimating that base cattle inventories will rise an additional 1.4% to 10.38 million head by the end of 2014 due to an expected increase in dairy cattle numbers. It is estimated that approximately eighty new dairy farms will come into production in 2014 which will account for 50,000 to 60,000 head of the forecast 70,000 extra dairy cows.
For 2014 total slaughter is now forecast to reach 4.3 million head, a five percent upward revision from Post’s previous forecast. Both the cow and feeder calf slaughter numbers have been revised upward by five percent and ten percent respectively. The higher dairy herd numbers and the repeat of dry conditions (January through March 2014) in the biggest dairying area, Waikato, is likely to mean the cow slaughter will remain higher than originally forecast. Interestingly the calf slaughter, numerically 46% of total kill, only provides five percent of the total beef produced. The extra dairy cows calving in August 2014 and new animal welfare rules, likely later in the year, which will reduce on-farm destruction of un-wanted calves, should result in the forecast increased feeder calf slaughter.
In 2013 the total slaughter has been revised to reflect official Statistics New Zealand data, and at 4.29 million head was three percent higher than the previous estimate. Primarily this was caused by increased calf and cow slaughter. It was thought the nation-wide drought in the first half of 2013 would boost the other adult cattle kill numbers but really all it did was bring the kill forward. Then in the second half of the year the good pasture conditions prompted farmers to delay slaughter in an effort to increase carcass weights.
New Zealand sheep and beef farmers have made a very good recovery from the drought in the first half of 2013. A complete reversal during the second half of 2013 to beneficial climatic conditions should result in higher average cattle carcass weights in 2014, recovering from 284 kilograms per head for adult cattle, excluding cows, in 2013 to reach 287 kilograms per head. This combined with increased slaughter numbers will boost beef production to a revised total in 2014 of 626,000 metric tons (MT), up 1.3% over the previous forecast. For 2013 actual beef production was 620,000 MT, a one percent downward revision from the previous forecast. The increased cow and calf slaughter numbers and beef production couldn’t make up for the drought induced adult steer, heifer, and bull reduced production.
At 524,000 MT (carcass weight basis), beef exports in 2014 have been revised up two percent due to forecast higher beef production combined with a reduced domestic consumption estimate. In 2013 exports increased to 529,000 MT (up 1.3%) as domestic consumption at 106,000 MT was revised down from previous Post estimates.
Exports to the US in 2013 were 245,000 MT (carcass weight basis) which is consistent with earlier Post estimates. For 2014, export shipments are expected to reach the same level of 245,000 MT.
The wild card here is China. Chinese beef demand exploded in early 2013 with New Zealand beef shipments to the PRC outpacing 2012 levels by a massive 340%. However there isn’t quite the buzz at the New Zealand end of the market now there was a year ago when the trade with China really took off. Documentation-related access problems resulted in several thousand tons of product being stuck at several Chinese ports for up to twelve weeks during the March-May period of 2013, has led to a more cautious approach among NZ exporters.
While the trade statistics show an increase in manufacturing beef was being shipped to China, the demand was for specific manufacturing cuts which were paying very well. However now that the US demand and pricing for imported manufacturing beef is ramping up it is thought some price resistance will creep into Chinese purchasing and curb demand. On this basis it is anticipated the tonnage to be shipped to China by New Zealand in 2014 will be similar to 2013 levels, despite some commentators having said beef exports to China in 2014 could double the 2013 volume