We know New Zealand is basically the only competitor Australia has in the lamb and mutton markets, but they are also a pretty big player in the lean beef export sector as well. Like Australia, NZ cattle slaughter and beef exports show seasonality, however, it is much more pronounced and supplies are now on the slide.
There are plenty of beef cattle in New Zealand, but dairy cattle make up a much larger proportion of the kill over the ditch. In 2020 just over 42% of the adult cattle slaughtered in New Zealand were dairy cattle, largely cull cows and young bulls.
Cattle slaughter in New Zealand is highly seasonal. In Australia, we have northern and southern herds, which somewhat mitigates supply seasonality. On average the smallest slaughter month in Australia is 73% of the largest. In New Zealand, the average adult cattle slaughter in August is just 29.5% of the May level.
Figure 1 shows NZ adult cattle slaughter is currently in the midst of its annual decline. NZ cattle slaughter has been close to last year, and the average, and there is little reason to think it isn’t on its way down during winter.
New Zealand has a small population so export most of their beef. NZ exported a record 473,000 tonnes last year, compared to Australia’s 1.04 million tonnes. NZ beef exports follow a similar trend to slaughter, bottoming out in spring, after peaking in autumn.
New Zealand’s beef export markets are not as diverse as Australia. In the period from October 21 to April this year, 77% of New Zealand’s beef exports have gone to the US and China. The split between NZ’s major export markets is pretty close to 50:50, with the US and China competing for the lean protein, while better cuts end up in Europe.
What does it mean?
Falling beef exports from New Zealand are going to further add to tight global beef supplies. For Australian cattle producers this is good news, with the US and Chinese buyers likely to compete harder for lean beef in later winter and spring.
Export prices to the US have taken a breather in the last fortnight, as US buyers baulk at the rising values. They could take another leg up, and offer more support for local finished cattle prices, as supplies out of New Zealand fall.
Key Points
- New Zealand is a competitor for Australia in the beef export markets, especially lean beef.
- Cattle slaughter in NZ shows strong seasonality, as do export volumes.
- Falling export volumes from NZ should offer further support for beef export values in the coming months.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: USDA, Steiner, MLA
