That was largely because of the expected increase in US beef production, pegged to be up by 3% next year, which would soften US demand for New Zealand beef, Mr Costello said.
The US election result would also have an impact, albeit in the medium to longer-term, as any chance of the Trans Pacific Partnership agreement being approved was now unlikely.
That would give Australian beef exports to Japan a tariff advantage of more than a 10% over New Zealand beef.
Despite those factors exerting some pressure in New Zealand, beef prices were likely to remain well above historical averages, Mr Costello said.
"While there will be downward pressure on beef prices, we are forecasting a restriction in domestic beef production as the New Zealand herd recovers from liquidation and this will help limit any potential downside for prices," he said.
The low beef supply forecast from Australia in coming years would also support New Zealand beef prices.
Those factors should ensure New Zealand farmgate prices next year stayed above the five-year average. The latest Situation and Outlook for Primary Industries said New Zealand beef production was forecast to decline by 50,000 tonnes to 625,000 tonnes as fewer dairy cows were sent to slaughter next year.
Production was about 50,000 tonnes higher than usual in each of the past two years because of record dairy cow culling resulting from low dairy prices.
Assuming the dairy herd resumed growing as forecast, beef production volumes would naturally fall back to previous levels, the report said.
