Market Update - April 2023

Global markets largely remain in a holding pattern, with little change from the past two months.

Brazilian beef is flowing back into China following their recent BSE scare. Customers remain engaged but are certainly not in the buoyant frame of mind that we would like them to be at this time of the year. In-market inventories remain stubbornly high and that looks like it is unlikely to change in the short term, hence it will continue to be a case of maintaining a steady flow of business into key customers as the market slowly but surely returns to some form of balance. While consumer confidence remains poor and households are saving rather than spending – which I am sure is not what the Chinese government wants them to do – we remain confident over where China will be as we look ahead into the later months of 2023.

It has been a more positive month in Japan, notably for lamb, with the seasonal uplift in demand leading up to their Golden Week holiday in early May providing a welcome boost to sales. The beef market remains soft, but US imports are certainly slowing and getting more expensive due to the shortage of product within the US industry, which bodes well for opportunities moving forward. In the absence of our normal Ocean Beef volumes over recent months due to our work on the Wakanui feedlot, we have seen good interest in our grass fed beef. We are hopeful that the silver lining of not having Ocean Beef in our portfolio is that we have broadened our market for grass fed beef and that this will continue to be a product of interest for specific retailers once our grain finished beef is back in the market later this year.

The UK and Europe are seeing the usual uplift in inquires for lamb as buyers look ahead to the summer season. Chilled pricing is being led by UK and Irish offerings and demand for frozen remains generally constrained due to the high levels of in-market stocks that still need to be worked through, but it is certainly looking more hopeful in the UK especially, with the market for specific cuts appearing to be returning to equilibrium. European beef processors are reporting a decline in demand for higher value cuts as consumers trade down to ground beef as the economic slowdown continues to impact consumer confidence. This is being reflected in demand for imported beef as well, with sales steady but pricing generally below expectations.  

I have just returned from two weeks travelling across the US meeting our chilled and frozen beef customers, as well as spending time with the team at The Lamb Company. My visit reinforced the opportunity that exists for New Zealand frozen manufacturing beef, with the looming shortage of domestic lean the main topic of conversation. Cow slaughter rates are 8% down right now versus two months ago and well behind the same point in 2022. This is being reflected in futures markets, with record highs predicted for later this year and into 2024. There does however appear to be plenty of inventory in cold stores, so that increased demand for imported product will likely be a slower burn than perhaps hoped, but we have seen pricing inch upwards over the past month and we expect a similar trajectory in the month ahead. On the premium/chilled side, retailers are showing increasing interest in grass fed beef, but this would appear to be more driven around their concern over domestic grain fed beef shortages and pricing rather than any major change in consumer interest in this category. Regardless, it presents a great opportunity to continue to get our product on shelf and to prove to those retailers that perhaps have been reluctantly to try grass fed beef that there is a niche for it and consumers are willing to engage, particularly if the price encourages them to do so. Lamb demand is solid, but pricing remains below expectations, largely driven by the continued influence of Australian product at relatively cheap prices. Certainly, in the restaurants I frequented, the lamb on menus was far more weighted towards Australian than New Zealand, which highlights the challenge and opportunity for The Lamb Company moving forward.

Supply chains have been running relatively smoothly over recent weeks and looking ahead we are confident that we will have sufficient containers and vessel space to keep our product moving and our coldstores at manageable levels. With demand slowly heading in the right direction as we look ahead to the northern hemisphere summer this will be an important part of the puzzle as we look to make the most of opportunities and continue to meet our customers’ expectations.

Rick Walker
ANZCO Foods General Manager Sales and Marketing