News - New Zealand Articles

Global beef supplies are expected to remain constrained in 2022 due to production rebalancing in key export countries. The US is experiencing a reduction in feedlot cattle slaughter, while Brazil and Argentina anticipate a slight increase in production. New Zealand beef production is expected to decline following a temporary increase in 2021. Consumer demand for beef is projected to remain high, particularly from China and the US. However, processing and supply chain challenges, high beef prices, weaker economic conditions, and currency fluctuations pose risks to pricing. Global dairy commodity prices have risen, driven by restricted milk supply in the EU, US, and New Zealand. New Zealand farmers have reached record milk prices for the 2021/22 season. Despite inflationary pressures and higher input costs, the profitability of dairy farmers is expected to be favourable. Changes to Fonterra's capital structure have been approved, which may further support dairy demand. China remains a significant determinant of elevated powder prices, although economic uncertainties, government shifts, and power shortages pose downside risks. Global fertiliser prices, including urea and phosphate, are expected to remain relatively high. Corn, soybeans, and wheat prices are also projected to stay elevated, supporting demand for fertilisers. Supply of phosphate is expected to remain tight due to China's export restrictions. The Ukrainian and Russian crisis poses an upside risk to fertiliser prices. The New Zealand dollar is expected to maintain its strength, supported by healthy global commodity demand and the Reserve Bank of New Zealand's rate increases. Supply chain challenges and labour availability remain key risks.

The dairy market is experiencing soaring prices due to restricted global milk supply, with the EU, US, and New Zealand all facing tight supply situations. Farmers in New Zealand are expected to have a profitable 2021/22 season with record milk prices, although some may not achieve record profitability due to higher cost structures. Changes to Fonterra's capital structure are also anticipated. In the beef market, global supplies are expected to remain constrained in 2022, with reduced production in the US due to drought and tight profit margins. Consumer demand for beef is expected to remain elevated, particularly from China. The global pandemic continues to impact food markets and supply chains, leading to transitory supply chain costs, inflationary pressures, and changes in consumer purchasing behaviour. The Chinese market is experiencing strict lockdown policies and economic uncertainties, which may affect food markets. E-commerce in the food system has seen significant growth. In the urea and grain markets, global urea prices are expected to decline over the next six months, although local prices in New Zealand will likely remain higher than in 2021. Global prices of corn, soybeans, and wheat are expected to stay relatively high. La Nina weather conditions intensified in December 2021 and are expected to continue affecting New Zealand's climate in the first quarter of 2022. Higher temperatures, warm nights, and high humidity are forecasted, along with near-normal rainfall in the east and potential cloud cover in other areas. Soil moisture levels are expected to be near normal in some regions but below normal in others. Hotspot regions with soil moisture deficits have been identified, which may be relieved by tropical cyclone activity, but this also brings the risk of heavy rainfall and flooding.