Rabobank: World Meat Market to 'Ride the Storm Out'

SYDNEY, Australia — Since New Zealand’s livestock producers are well-placed to overcome short-term challenges and weather the storm created by the current financial crisis, the longer-term outlook for them is positive, according to Rabobank Australia, a division of the Rabobank Group.

Short-term challenges are ‘clouding the horizon’ for the global meat market with almost all stages of the supply chain being affected by the current financial crisis, said Wendy Voss, Rabobank senior animal proteins analyst during a recent producer meeting in New Zealand.

“What we’ve seen, as a result of the financial crisis, is a lot of uncertainty in the marketplace,” she added. “Global meat sales have been hit hard as consumers change their behavior by not eating out as much and trading down their choice of meat. Retail and food service companies are taking a ‘wait and see’ approach and tending to not buy large stocks of meat. Importers are also being impacted, both by the economic uncertainty, but also by the increased restrictions on access to credit. For beef, in particular, we’re seeing the Russian boom subsiding, while high U.S. beef stock levels in South Korea are also creating the potential for volatility in the market.”

Despite these challenges, there are several factors likely to provide a ‘silver lining’ for New Zealand producers over the next 12 months, she said. "The first is the depreciation of the New Zealand dollar against major export market currencies, in particularly the U.S. dollar, which will ease some pressure on buyers and exporters," she added. "The second is that imported beef prices in the United States are expected to remain strong in 2009, as domestic U.S. cow slaughter eases from its current high levels. For sheep meat, tightening supply in a number of major producing regions should provide support to sales of New Zealand product in key export markets."

Source: MeatPoultry.com