- Korea–New Zealand FTA concluded
- NZ beef exports to the US rise year-on-year
- Beef Producer Input Price Indices climb in September quarter
- Live cattle prices edge higher
- Thursday daily cattle summary
Korea–New Zealand FTA concluded
In the past week, Korea and New Zealand (NZ) have concluded negotiations on a Free Trade Agreement (FTA) on goods and services between the two countries (New Zealand Ministry of Foreign Affairs and Trade).
Negotiations between NZ and Korea formally concluded in Beijing on 7 November 2014, and the FTA was announced at the G20 in Brisbane on 15 November. This follows Korea announcing an FTA with Australia in December 2013, Canada in March 2014 and most recently with China in November 2014.
Korea is a high tariff market for NZ – it is estimated that NZ exporters currently pay NZ$229 million each year in tariffs for products entering Korea. The FTA will create an approximate tariff savings of NZ$65 million in the first year alone (MFAT).
The value of New Zealand meat exports to Korea totalled NZ$175 million in the 2013-14 fiscal year, accounting for 11pc of NZ’s total exports to Korea. Korea’s current tariff on fresh and frozen NZ beef is 40pc, and under the FTA this will be eliminated after 15 years. For NZ sheepmeat, the current tariff imposed by Korea is 22.5pc, and the FTA will see this tariff removed in 10 years (MFAT).
NZ beef exports to the US rise year-on-year
In October, typically one of the lowest months for New Zealand (NZ) beef exports, shipments totalled 16,432 tonnes swt – 3pc higher than the same time last year.
Volumes to the US, the major export destination for NZ beef, increased 17pc year-on-year to 7,793 tonnes swt – despite very large volumes of Australian beef shipped over the same period. Shipments to the Middle East during October were up 15pc on year-ago levels, at 1,629 tonnes swt, and similarly to China, beef exports lifted 10pc, totalling 1,081 tonnes swt.
In contrast, volumes to Japan and Korea both declined 9% in October, compared to the corresponding month last year, to 1,094 tonnes swt and 814 tonnes swt, respectively.
Beef Producer Input Price Indices climb in September quarter
During the September quarter, the northern and southern Beef Producers Input Price Indices (BPIPI) increased 3pc and 2pc year-on-year, respectively.
Interestingly, underpinning the rise in the northern index was a 13pc rise in the capital cost of the beef herd, to 142.96 points, largely due to higher cattle prices for the September quarter compared to year-ago levels.
Interest rate expenses in the north remained steady year-on-year, at 51.47 points, while repairs and maintenance rose 2pc, to 241.67 points. Wages for hired labour increased 3pc, to 256.15 points – in line with national averages.
The southern BPIPI rose to a lesser extent, largely due to the capital cost of the beef herd remaining steady year-on-year, at 146.95 points, with depreciation on plant and equipment influencing the increase, up 3pc over the period, to 172.98 points. Repairs and maintenance increased 2% for the period, while interest and wages for hired labour in the southern index were equal to those in the northern index.
Live cattle prices edge higher
With the demand for live cattle increasing, particularly as the end of the year approaches to fill quota allocations into Indonesia, indicative feeder cattle prices have been creeping higher.
Feeder steers to Indonesia from Darwin have increased from around $2.15/kg lwt in early September, to $2.40-50/kg lwt this week. Similar lines from Broome to Indonesia have increased to a slightly lesser extent, up form an indicative $2.20/kg lwt in early September, to around $2.30/kg lwt this week, with reports now suggesting activity from Broome will seasonally slow, before picking up again in March next year. Indicative quotes from Townsville for steers are currently $2.10/kg lwt.
Anecdotally, reports from Queensland and the NT suggest cattle are becoming harder to access, with exporters now travelling into central and western Queensland to procure them. Given current demand, live export feeder prices are expected to remain firm for the remainder of the year.
Thursday daily cattle summary
Numbers at Dalby decreased 21pc week-on-week to 5,200 head. With quality mixed and supplies strong, yearlings sold either side of firm and there were some good runs suitable to feeders and restockers. While some light runs to restockers trended dearer, medium C2 yearling steers to feeder buyers averaged 192¢, back 1¢, and the heifer portion averaged 169¢, back 4¢/kg. Grown steers also sold to a mixed trend, while cows trended mostly easier. Medium C2 grown steers onto feed averaged 196¢, up 12¢, while medium D3 cows averaged 145¢, back 5¢/kg.
Casino yarded 965 head, back 16pc week-on-week, and, while there was a good supply of light and medium weight vealers on offer, there were limited numbers of good quality milk and supplementary fed consignments. Light D1 vealer steers to restockers eased 1¢, averaging 150¢ and selling to a top of 199¢, and medium C2 lines also eased 1¢, averaging 184¢/kg. Medium C2 vealer heifers eased 3¢, averaging 185¢, and D2 lines eased 1¢, averaging 159¢/kg. The E1 muscle cow portion eased 13¢ to 21¢, while medium D2 lines held firm on 121¢/kg.
Consignments to Warrnambool eased slightly to 1,974 head and, despite two additional restockers joining the usual buying group, prices eased on the mixed quality yarding. Heavy D3 yearling heifers to slaughter averaged 138¢, back 6¢, while D2 lines averaged 133¢, back 11¢/kg. Heavy C3 grown steers averaged 164¢, back 17¢, and heavy D2 manufacturing dairy steers averaged 139¢, back 16¢/kg. Heavy D3 cows to slaughter averaged 140¢, back 5¢, and sold to a top of 144¢/kg.
At close of Wednesday’s market, the Eastern Young Cattle Indicator (EYCI) was down 1.50¢, at 328.25¢/kg cwt. Trade steers were firm on 182¢, while medium steers were 1¢ dearer, at 168¢/kg. Feeder steers were firm on 184¢ and heavy steers were back 1¢, at 178¢/kg. Medium cows averaged 139¢, up 1¢/kg.
Source: Meat & Livestock Australia