Demand for lamb in the Northern Hemisphere is growing, Alliance Group says. Photo / NZ Herald
An upsurge in demand for lamb in North America, and in other northern hemisphere markets, has seen product prices lift substantially, adding to a generally favourable outlook for New Zealand commodities.
Alliance Group, New Zealand's biggest sheepmeat exporter, is seeing a sea change in behaviour as a result of Covid-19 lockdowns, with US consumers now more likely to opt for something different from the standard fare of beef, chicken and pork.
The co-op's general manager for global sales - Shane Kingston - said Alliance had already seen a demand pickup in the leadup to Thanksgiving and Christmas in northern markets.
Fresh meat sales across the board in the United States rose by 18.3 per cent in the year to August compared with the pre-Covid August 2019 year, and by 34.2 per cent for lamb over the same comparative periods.
"There has been a significant category outperformance by lamb, which is consistent with our growth ambitions within that marketplace, but it is also something that we can further build on," Kingston told the Herald.
Meat consumption in the US is dominated by beef, chicken and pork.
Most of America's lamb supply comes from New Zealand.
"Throughout the pandemic people have become more adventurous," Kingston said.
"They have not had access to out-of-home dining and they have sought to create more diversity in their home cooking," he said.
"They have created dishes that they ordinarily would not have.
"Lamb has become more mainstream through that adventure," he said.
Kingston said Alliance, in line with the trend, had created a more convenient product for consumers to take home.
He noted that the Northern Hemisphere consumption patterns - typically centring on the big holidays - had become slightly less seasonal to the point that there was more everyday consumption of sheep meat.
"Our big focus at the moment is our chilled programme into continental Europe and the UK and North America."
On a macro level, global protein demand is very strong and supply is a little short, he said.
Kingston said the generally positive outlook for sheepmeat was overshadowed by supply chain risk and higher shipping costs, which mean not all price gains were washing back to farmers.
Even so, farmers are getting $9.15 to $9.50 per kg for their lamb - up from $7.20/kg last year.
In terms of shipping, the market was less disrupted than it was at height of the New Zealand export season earlier in the year.
"The outlook remains one of disruption so we remain vigilant to move the product that we need to its ok now relative to where it has been," he said.
In terms of trade access post-Brexit, New Zealand continues to operate within its quota to the UK but is actively trying to gain greater access to beef.
"At the moment our ability to access the UK and European market for beef is quite limited so the FTA agreement continues to unfold we are hoping that beef starts to play a more important part in those discussions," he said.
In the main market of China - prices had remained solid but exporters like Alliance are waiting to see how the Evergrande failure and power supply issues play out in the PRC to see what impact those factors have on the economy and consumption.
Foodservice - the trade to restaurants and further processors - is starting to show signs of life as countries move out of lockdown in response to higher vaccination levels.
New Zealand commodities are generally faring well on overseas markets.
ASB's NZD commodities index recorded its highest ever average over the June quarter.
"On a weekly basis, last week saw our NZD index reach its third-highest level ever – prices have remained both strong and stable over the beginning of Spring, despite the lengthy spell in Auckland at higher COVID alert levels," ASB said.