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Although demand from all red meat markets seems to be firing at the same time, supply chain logistics and pandemic risks are taking the shine off this demand, and unsettling the prospects for 2022

Rural News / analysis
Although demand from all red meat markets seems to be firing at the same time, supply chain logistics and pandemic risks are taking the shine off this demand, and unsettling the prospects for 2022
beef and sheep

Asking the meat companies when the present inflated level of market demand and high prices will fall off a cliff won’t provoke any confident predictions of impending disaster. But there is a degree of nervousness, partly because high prices from importing countries never last for ever, but more because a combination of factors beyond exporters’ control threaten to disrupt the party.

None of these factors has yet had a serious impact, but inevitably one or all of them will arise during the first half of 2022 which every farmer will know is the peak of the season.

The first, probably most immediate, issue is the livestock supply pattern which will remain low in the lead up to Christmas because of the cold spring before surging just when the plants have a series of short weeks. If it dries out in January, slaughter space will be very tight which explains why all processors are trying to encourage suppliers to get in early.

ANZCO’s Rick Walker says livestock prices are ridiculous at the moment with $9.50 per kg for lamb and $6.50-6.60 for beef unsustainable, in spite of the positive state of the market. However he notes some worrying signs of consumers trading down either to cheaper cuts or different meat varieties, particularly in China where consumer confidence has been affected by the decline in property prices.

Mark de Lautour, AFFCO’s GM Marketing, is concerned the livestock supply curve will cause a dumbing down of product formats because of a shortage of labour and processing capacity; this will make it impossible to optimise the product mix to continue achieving the best prices. That said, he says this is the first time in his career almost every market is firing at the same time which is why farmgate pricing continues to hold at the current levels.

The global shortage of quality product is the major cause of market strength. China’s demand for both beef and lamb means it has had to adjust its pricing to match US market demand, while the EU is also paying well for lamb because it cannot source the volumes it needs from the UK post BREXIT.

Shipping capacity and delays at key ports are another area of concern which look as though things will get worse before they improve. Shane Kingston, General Manager Sales at Alliance Group, explains: “While demand and prices are strong, global supply chains remain distressed across sea freight and landside logistics while reduced passenger air travel continues to limit air options. We are monitoring the situation and working closely with our logistics partners and customers to manage the impact, but we do not anticipate any improvement in the next few months. Of most concern to our New Zealand export supply chains are Los Angeles/Long Beach, Dalian and the UK.”

At LA/Long Beach there are more than 50,000 containers waiting over nine days in port awaiting discharge with this number increasing in spite of US Government action. Dalian, one of the largest Chinese ports handling New Zealand shipments, has experienced a return of Covid-19 and strict supervision in and out of the port has resulted in a shortage of truck drivers because of the requirement to take a 24 hour Nucleic Acid test. While other ports are available, the impact is to increase the costs and risks associated with shipments from New Zealand.

At Felixstowe, which is the largest UK container port servicing New Zealand, there is a build-up of both full and empty shipping containers due to the market conditions caused by the global shipping disruption. Kingston says “This has been exacerbated by the ongoing global impact of COVID-19 and increased demand from UK consumers. This is putting a strain on port operations and the ability to quickly clear containers. Ultimately, it will have an impact on available empty containers back in New Zealand.”

Although not a viable solution for exports to China and the UK, AFFCO has resorted to reefer container shipping to service both East and West Coast North America despite the fact reefer ships are old technology. Shipments have already been made this year and reefers are booked for early March and June/July when AFFCO will also look to cooperate with other meat exporters and possibly a dairy company for butter exports. De Lautour says reefer ships are hard to get hold of because there is huge demand on east/west trade routes, but AFFCO has been able to build credibility with shipping lines by providing backloads on the NZ/USA routes. He does not rate the chance of securing an agreement with Chinese importation authorities for reefers as being very good, given the less than ideal relationship with Chinese authorities at the moment.

The third leg of the trifecta is the potential for Covid-19 to disrupt production as well as consumer markets, although the rest of the world appears to have weathered the worst disruption remarkably well. It is impossible to predict the impact on market demand of the latest upsurge in Covid cases and the reintroduction of lockdowns in Europe and possibly China.

The meat industry got through 2020 and this year so far with remarkably little interference from the pandemic, but as New Zealand emerges from lockdowns and moves back into some sort of normality with the traffic light system, internal and possibly international travel, there is no guarantee it will remain unaffected. Hopefully all meat workers will have been double vaccinated which would minimise the risk of an outbreak in the workplace. But any restrictions on plant operations will automatically reduce throughput and affect product mix.

After an incredibly successful 2021, the meat industry will await next year with some nervousness about the chances of a repeat.

Current schedule and saleyard prices are available in the right-hand menu of the Rural section of this website.

P2 Steer

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My beef is with Houses, cannot grow fat and live in a rental, mental House that some are scrooging the poor this Christmas.  And as for Father coming down the Chimney  this Christmas...Christmas is when the Fat  of the Land might get stuck with Covid and get their just Deserts, locked down at Home in their WonderLand of Falling House Prices as all our visitors decline to stay and the over charged rentals and underrated Savers dissapear overseas to a much Cheaper mode of life. 

Why Work, be Happy is my Motto. Inflated prices and falling stupidity may  make us live happily ever after...This Christmas. Be of Good Cheer and Vegan is the way to go....when the Larder runs Out. And a Chateau in France is a way cheaper option than a Crap New Zealand edifice, like a Life Sentence Block....Here.

Half the World is starved of a meal...And Santa Claus is away with the Reindeer...Doner and Blitzen. 

He ate the others....that is what really sleighs me....till we Meat again...Merry Christmas.....And a Prosperous New Year.... Save yer a Falling Market....And Stuff yer China Bred Sniffles and stay Safe and Sound with the Family this Holiday Season. It ain't all Tinsel as Christ already knows....The Turkey is Stuffed, Lebanon Too. The Wind is Picking up and the Fires are Raging...and Tesla and others are off like a Rocket...tis a Billionaires dream....and the Last 12 Days of Christmas...will cost Billions if the Mugs blow their funds on a Christmas Diner. Save yer Money, Save yer Breath, Save yer Bacon, and Have a Vey Happy New Year. Cheers, Slurp.  Thats the Spirit of Christmas.....Nuff said.

The Practising Alchoholic...Christophe...Alter Ego. Also known as Santa Claus.



You what?....................?


ANZCO says beef prices at $6.50 - $6.60 are "ridiculous and unsustainable" but out here in the paddock those of us with calculators reckon the processors have been shaving up to a dollar a kg off what they could pay considering overseas pricing.


"ANZCO says beef prices at $6.50 - $6.60 are "ridiculous and unsustainable" Obviously ANZCO are living in an inflation free bubble? Why, I was just reading a story on the Stuff site about union calls for a raise in the minimum wage to $22.75/hr. Why bother with the hassles of farming, when you can make more money flipping burgers, than chasing the raw product around a paddock?