TL;DR:
- Alliance Group reports an increase in sheep and beef processing as livestock flows begin to normalise with the season change, despite earlier delays due to favourable growing conditions.
- The company is adjusting processing capacity to match livestock availability, with some plants on flexible notice to manage fluctuating supply, especially considering the dry conditions in regions like Marlborough.
- Market outlook shows mixed signals, with some improvement in North American demand but continued subdued economic confidence in China affecting lamb pricing and overall market stability.
As autumn approaches, New Zealand’s Alliance Group observes a significant uptick in sheep and beef processing numbers, following a period of delayed livestock flows attributed to optimal growing conditions across the North and southern South Islands.
In a late February update to its suppliers, the meat processor and exporter outlined its strategic adjustments to processing capacity in response to the evolving livestock supply landscape, ensuring efficient cost management and operational optimisation.
The company has introduced a ‘day-by-day’ notice system for some of its plants, allowing for rapid capacity adjustments in line with livestock flow variations. This approach is particularly pertinent as parts of New Zealand, such as Marlborough, grapple with some of the driest conditions in nearly a century, potentially impacting livestock availability.
Public holidays in the coming months, including Easter and Anzac Day, alongside a seasonal shift in production focus from sheep to beef, are expected to further influence processing schedules. Alliance Group urges farmers to maintain close communication with their livestock representatives to facilitate accurate forecasting and planning, aiming to mitigate potential capacity constraints during peak volume periods.
Despite some positive economic indicators from China, the company cautions that any significant uplift in lamb pricing remains distant. The post-Chinese New Year market assessment indicates no substantial change, with North American demand showing signs of improvement across retail and food service sectors.
The European Union’s demand remains steady, with inventory levels gradually decreasing, while the UK market shows moderate demand stability.
The Middle East emerges as an alternative market for commodity products traditionally destined for China, although logistical challenges in the Red Sea have introduced additional costs and delays. For mutton, Chinese demand continues at a steady pace, particularly for full carcasses, yet the overall market outlook remains flat.
Alliance Group is exploring market diversification strategies, particularly in wider Asia, including Taiwan, Malaysia, and Singapore while maintaining viable options in the EU/UK and North American markets for specific cuts. The venison market negotiations for 2024 are ongoing, with firm demand for middle cuts, though challenges persist for leg items.
In the beef sector, post-Chinese New Year consumption remains steady, with stable demand across various cuts. However, market confidence in China is crucial for future pricing levels, currently hampered by consumer economic concerns.
As the short-term outlook presents a mixed picture across major trading markets, Alliance Group remains committed to leveraging its cooperative model to navigate these uncertain times, actively seeking alternative markets to ensure the best possible returns for its products.
