NZ report on China market examines when demand may improve
Beef + Lamb New Zealand (B+LNZ) has published a market insights report detailing the current and projected state of New Zealand’s red meat exports to China. The report highlights several key factors influencing market conditions and when we may expect to see conditions improve.
Currently B+LNZ does not anticipate any significant turnaround in Chinese demand for red meat in the short term.
Sheepmeat prices, in particular, are predicted to remain at multi-year lows, as New Zealand competes with strong Australian exports and abundant domestic pork supplies in China and the Chinese economy remains weak.
As China is New Zealand’s largest market for sheepmeat by far, our domestic lamb and mutton farmgate prices are highly correlated with the value of sheepmeat exported to China.
Sheepmeat prices in China are now lower than during the 2016-17 season when prices first began to accelerate.
At this stage, China’s economy is not expected to rebound for some time because of continuing problems in the property sector, and low consumer sentiment is likely to stifle domestic demand and activity.
The Chinese economy, however, is notoriously opaque and hard to predict. The number of official indicators that are released about the economy has reduced significantly in the last year.
The Chinese economy therefore could improve more quickly than currently expected. Much will depend on growth in the rest of the world and whether that can help boost China’s manufacturing exports and economy.
Despite these short-term challenges, China’s economy is projected to recover in the medium term and as it rebounds so too will the disposable incomes of the largest middle class in the world.
