Tariffs causing uncertainty over demand for beef, milk

Otago Daily Times

17-06-2025

New Zealand beef and milk demand was steady over the first quarter of the year but uncertainty looms with the results of export tariffs to the United States and knock-on effects from the flurry of international agreements being negotiated with the Trump administration yet to be factored in to reports.
New Zealand beef production for the first three months of this calendar year hit around the 200,000 tonne mark, a report from agribusiness specialist Rabobank shows.
That was up by 1% on the previous year.
"This uptick defied earlier forecasts predicting a 5% decline in the first three months of the year, with the higher slaughter volumes in the North Island likely influenced by dry on-farm conditions over summer," report co-author RaboResearch senior agricultural analyst Jen Corkran said.
However, RaboResearch is still forecasting a 4% decline in total New Zealand production volumes for the 2025 calendar year, the report said.
"Slaughter numbers nationally from January 1 to late April 2025 are down by 3.3% compared to the same period in 2024," Ms Corkran said.
"We expect slaughter numbers will continue to be lower than 2024 throughout the rest of the year, with production volumes influenced by slaughter weight.
"Beef exports were basically flat for Q1 versus 2024, at close to 129,000 tonnes," Ms Corkran said.
"However, over the same period, the value of beef exports surged by 30% driven by robust demand and a weaker New Zealand dollar."
New Zealand year-on-year export volumes were steady and up 30% by value.
"The United States continues to be a key market, accounting for 51% of export volumes and 46% of total value in Q1, 2025.
"Conversely, exports to China have further declined, with volumes now making up 31% of overall beef exports."
Ms Corkran said the higher export returns were driving record farm-gate prices across all cattle cohorts.
"The April-June export data will be crucial in observing changes in trade flows and values, particularly given the implementation of US tariffs."
RaboResearch says demand is at historic high for imported beef to the US and with New Zealand facing a base 10% tariff, export volumes should remain steady, though consumers would wear additional costs.
Despite that, bigger ramifications could be expected if there is a big change to the US-China trading arrangements.
The results of a number of countries entering into and negotiating trade agreements with the US could also have implications for global trade dynamics, RaboResearch says.
The United Kingdom, China, Japan, South Korea, India, Canada, Mexico, Israel and Italy are just some of the nations already involved in talks.
Meanwhile, geopolitical uncertainty and the "potential for a wider series of outcomes" across the season could also affect milk prices, Fonterra says.
"Therefore, our opening forecast farm-gate milk price for the 2025-26 season of $10.00 per kgMS sits within a wide forecast range of $8.00-$11.00 per kgMS," a statement from Fonterra chief executive Miles Hurrell said.
That forecast puts prices with a range either side of the current season milk price of $10.00 per kgMS.
"We've delivered strong shareholder returns through [the financial year] 2025, including a 22c interim dividend, and as we get closer to the end of the [financial] year, we are focused on maintaining this momentum.
"Our forecast farm-gate milk price for the current season is driven by strong demand for our milk price reference products and our range is unchanged at $9.70-$10.30 with a midpoint of $10.00 per kgMS.
"We're also pleased to tighten our year-end forecast earnings within the existing range, given the strength of our third-quarter performance," Mr Hurrell said.
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