Chinese demand stirs in New Zealand

16 September 2015

AgriHQ New Zealand this week reported a revival in Chinese demand, indicating that high inventories may be clearing in the lead up to Chinese New Year. The festival, held in February next year, is the peak time for sheepmeat consumption due to the cooler weather.

The slower trade earlier this year is widely believed to have been caused by excess mutton in storage in China, placing additional pressure on New Zealand’s traditional markets of the EU and US.

Although lamb slaughter and production levels have lifted in New Zealand (October 2014-June 2015), lamb exports are forecast to decline to 298,000 tonnes swt in 2014-15 (Beef + Lamb New Zealand’s Mid-Season Update).

Mutton production from October to June is 7% lower than the previous year at 91,064 tonnes cwt, as sheep slaughter levels fell 6% to 3.6 million head.

Australian lamb exports to China in August were 27% lower at 2,307 tonnes swt and mutton exports have fallen 50%.

According to Global Trade Atlas, the unit price for mutton in New Zealand is higher than Australia, with July figures at 3.52USD for New Zealand and 2.32USD for Australia. Although both have eased in 2015, New Zealand’s Free Trade Agreement (FTA) with China means that sheepmeat will be tariff free next year, which may see sheepmeat from New Zealand more competitive compared to Australia (although this will not be reflected in the unit prices).

With Chinese consumers regarding sheepmeat from both Australia and New Zealand similarly, this invigorated demand from China for New Zealand product could also see Chinese demand for Australian sheepmeat lift.

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