North America has emerged in recent months as New Zealand’s largest red meat market and a major NZ exporter says although its market fundamentals remain sound, there could be some volatility.
Alliance Group global sales director James McWilliam has just returned from visiting the United States and says ongoing fiscal and geopolitical issues and the pending election could all create challenges in the coming year.
“Demand fundamentals are sound in North America but there remains a lot of volatility.”
He said North America emerged as a “good news story” last year, taking product diverted from poor-performing markets.
“In a very short space of time we were able to pivot product away from less positive markets such as China.”
In April exports to the US alone were up 19% on the previous year to $261 million, NZ’s largest market for the month. There was also a large increase in exports to Canada, up 105% to $32 million.
This was repeated in May when the US took $358m, up 28% on a year earlier. In contrast, exports to China were $231m for the month, down 37% on the previous year.
McWilliam said NZ red meat has found favour with affluent North American consumers, attracted by its free range, grass-fed, antibiotic-free attributes.
The Lamb Company, jointly owned by several NZ and Australian processors, has been crucial in leveraging those attributes and finding markets throughout North America.
“It has procured significant volumes of primal cuts and, through its three processing facilities, added value by supplying retail-ready products,” McWilliam said.
Looking ahead, McWilliam described the global economy as volatile.
Inflation and geopolitical issues are still front of mind for many consumers but in North America there is added issue of the presidential election.
Global inflation has been running at about 8.9% compared to between 6.3% and 6.7% at the height of the global financial crisis in 2008-09.
Working in favour of NZ exporters is the continual decline in the size of the North American cattle herd due to climatic conditions, while a lack of available lamb for the next few months will deplete global inventories.
McWilliam said that will benefit short-term prices but could also provide some price stability into next season.
He said China remains a challenging market as consumers sit on their wealth and savings unwilling to spend while they weather a property crisis.
Alliance is reducing its reliance on China by searching for alternative markets.
