ANZCO Foods Market Update - December 2024

As has become tradition, before writing this month’s report I took a look back at my updates in December 2022 and 2023 to remind myself where the meat world was at, assess what has changed, and gauge if any predictions I may have made for 2024 were in any shape or form accurate.

The largest take away from that exercise was that I could pretty much cut and paste my market report from this time last year and change a few dates and names and no one would question its legitimacy. That’s not a great thing given how tough 2024 has generally been.

It’s also disconcerting that – two years on - I can still write about the ongoing conflict between Russia and Ukraine, and 12 months on nothing has been resolved or shows any real signs of getting better in the Middle East. Geopolitics may not have a direct impact on our industry, but it certainly has an influence, and having this level of volatility in the world does nothing to benefit consumer confidence or our ability to maximise value for your product.

My rate of success in terms of predictions for 2024 was far from impressive, but, for what it is worth, I will once again spin the wheel and share my views of where we may be 12 months from now:

• My first prediction should come as no surprise because it will be the third year in a row that it has made the list, that being that the US industry will finally run out of cattle! It seems crazy to think we have been waiting for this inevitable truth to play out for so long, and even the most recent figures out of the US industry suggest numbers of cattle on feed remain high and beef production levels strong. All the fundamentals remain on our side however, and I firmly believe that as 2025 unfolds we will see increasing opportunities in the USA and Canada for manufacturing beef and our premium beef offerings, leveraging both The Lamb Company’s in-market expertise and infrastructure as well as our own premium brands such as Stony River Black Angus and Ocean Beef. I'm also confident that the lamb market in the US and Canada will be positive for the New Zealand industry, continuing its good run of form.

Elsewhere in the world however, I am struggling to find anything in the tea leaves that gives me significant hope in terms of predictions for 2025.

• I think the Japanese market will be a slow burn, as demand for imported beef and, to a lesser degree, lamb, recovers after a tough two years on the back of poor economic conditions and weak consumer confidence levels. Despite this, Japan remains an incredibly important and valuable part of the ANZCO Foods global sales network. We are very fortunate to have invested in the capability we have on the ground there, which provides a real advantage to our overall business.
• Europe feels like it is heading into 2025 in a worse position than this time last year, with the general economic and political conditions in major markets such as France and Germany creating uncertainty, which only leads to consumers remaining cautious about how they are choosing to spend their money. The ongoing conflicts in Ukraine and the Middle East also have a bigger impact on market sentiment in in Europe than elsewhere because of its proximity. Let’s hope President Trump delivers on his promise to resolve these issues within 24 hours of taking office in January!
• The UK will also remain a challenge politically and economically in 2025, but we have seen positivity from our customers in terms of purchasing patterns during the past six months and I expect this to continue to improve as 2025 unfolds. This however is not necessarily consumption-driven, but is more linked to the growing concerns about the long-term future and viability of the UK beef and lamb sector, which is likely to lead to a combination of tight domestic supply and high domestic prices.
• Finally, China remains the elephant in the corner of the room when it comes to predicting anything to do with global beef and lamb markets. Like the UK, Europe and Japan, it is hard to see a massive shift in confidence level of Chinese consumers in 2025. However, I do expect to see our Chinese customers become a bit more aggressive when it comes to their buying behaviours and their appetite for securing our product. As with the UK and US, this is going to be driven by supply dynamics, and we are already starting to see the signs of tightening Brazilian beef supply leading to increasing price expectations. This can only benefit New Zealand processors and farmers. Likewise for lamb, the general view seems to be that Australian supply will definitely tighten in the second-half of 2025, and this can only be of benefit to us in China, given our reliance on this market for maximising value from many of our lower value cuts and products.

So, in summary, a mixed bag as we look ahead to the New Year. Consumption and consumer confidence globally is likely to remain tepid, but global supply dynamics may well play into our hands, whether it is tightening beef supply in the US, systemic issues across the agricultural sector in the UK, or slowing production out of Australia. The New Zealand industry is hardly in a position of strength when it comes to supply either, hence our focus at ANZCO Foods will continue to be on identifying pockets of value that exist within our markets and building long-lasting and profitable relationships with customers that recognise the value we bring to their businesses.

2024 has certainly been a tough year, on the farm and in the processing sector. Let's hope for things to turn the corner as we start afresh in 2025.

I hope you enjoy a well-deserved break from the farm during the Christmas period. On behalf of the team at ANZCO Foods, we appreciate your support as we aim to bring nutrition and good health from New Zealand's finest beef and lamb to the world.