How the USA's 'ad hoc' approach to Covid-19 benefits NZ beef

Photo / File

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Disruption in the US means things could be looking up for New Zealand beef, according to the latest Rabobank Agribusiness Monthly report.

"The whole supply chain [is] in complete disarray over there" said Rabobank Animal Proteins Analyst Blake Holgate.

Covid-19 meant the US was about 25 to 27 per cent down on production, which was very different to the way New Zealand handled the outbreak, Holgate told The Country's Jamie Mackay.

"We've had quite a structured approach to our reduction in capacity and then [we have been] building efficiencies into the system since then".

"America's very ad hoc and [with] workers not turning up or getting sick ... they're finding it very hard to manage".

As a result, there was a severe shortage of beef being produced in the US at a time when it was "flying out the door at retail level" said Holgate.

Rabobank Animal Proteins Analyst Blake Holgate. Photo / Supplied

"So wholesale beef prices in the United States are going through the roof. It's created a significant gap, it's created an opportunity for New Zealand beef exports into that market and put upward pressure on that US imported beef price".

Lamb was a different story, with prices falling, as New Zealand's lockdown processing restrictions started to bite, said Holgate.

The reduced processing capacity experienced through April had altered the normal procurement pressures that would otherwise come into play in May to put upward pressure on prices.

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However, there were reports that North Island lamb supplies were starting to slow and space availability in the South Island was improving, which could support a degree of procurement competition in some parts of the country later in the month.

"What we have seen in the last two to three weeks is a stabilisation of that lamb price so they held where they were as processors start to get on top of the processing capacity" said Holgate.

"But equally, we're at a time of the year where we would be expecting to see it to lift, so in terms of year-on-year, compared to where we were last year, we are starting to fall behind, and some of those normal procurement dynamics that we'd expect probably aren't playing out in quite the same way this year".

Also in today's interview: Holgate talked about the Covid-19 effect on New Zealand venison.