Meat & Wool Sector General Outlook embargo until 14 august 2009 Presentation to: NZAAA Conference Marlborough Convention Centre Blenheim 31 July 2009 P09025
Topics Pastoral Land Use Change Livestock Changes and Outlook Interest and Exchange Rates Price Trends and Global market comment Conclusion
Land Use Trend 14,000 12,000 Pastoral Land Area Ha (000) 10,000 8,000 6,000 4,000 2,000 0-28% 1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 +58% Sheep Beef Deer Goat Dairy Source: Meat & Wool New Zealand Ltd Economic Service Statistics New Zealand. Overall -20% -2.7 m Ha since 1990-91
Source: Meat & Wool New Zealand Economic Service Pastoral land Area 2008-09e Dairy Sheep & Beef Total pastoral 2.07 million ha 18% 9.21 million ha 82% 11.28 million ha 100%
NZ Sheep and Cattle Numbers 1990-91 to 2011-12 Sheep (000) 75,000 65,000 55,000 45,000 35,000 25,000 Dairy +68% Beef -9% Sheep -41% -5.8% -11.4% 6,000 5,000 4,000 1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 3,000 2,000 Cattle (000) Source: Meat & Wool New Zealand Economic Service Statistics New Zealand. % change 1990 to 2011 2008-09 sheep and beef decrease due to drought and dairy expansion
% Change (2004-05 to 2009-10) 10% 5% 0% Sheep Numbers 15% 10% 5% Beef Cattle Numbers -5% 0% % -10% -15% -20% -25% % -5% -10% -15% -20% -25% -30% -30% 60% 50% 40% Dairy Cattle Numbers 3% 0% Stock Units 30% -3% -6% -9% -12% -North -Wai BOP East Coast -Taranaki Manawatu -Marlb Canterbury Otago Southland -Otago Southland % 20% 10% 0% -10% -North-Wai BOP East Coast -Taranaki Manawatu -Marlb Canterbury Otago Southland -Otago Southland %
World Energy Prices $140 $66 Source: FAPRI 2008
Exchange Rate 10% Change Impact on Farm Gate price Appreciation Depreciation +10% -10% Lamb -14% +17% Mutton -18% +22% Beef -13% +16% Wool -12% +14% Source: Meat & Wool New Zealand Economic Service
Interest Rates Interest Rates 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2.5% Jul-08 Sep-08 Nov-08 Jan-09 Mar-09e May-09e Jul-09e Sep-09e Nov-09e Jan-10e Mar-10e May-10e OCR 90 Day Source: Reserve Bank of New Zealand, ANZ Meat & Wool New Zealand Economic Service
NZ Exchange Rate Trend (2000 Jan = 1000) Index 1800 1700 1600 1500 1400 1300 1200 1100 1000 900 800 700 2000 Jun 2000 Dec 2001 Jun 2001 Dec 2002 Jun 2002 Dec 2003 Jun 2003 Dec 2004 Jun 2004 Dec 2005 Jun 2005 Dec U.S. $ U.K. stg Euro 2006 Jun Source: Meat & Wool New Zealand Economic Service Reserve Bank of New Zealand 2006 Dec 2007 Jun 2007 Dec 2008 Jun 2008 Dec 2009 Jun Since float, March 1985 NZ $ av 59 cents US July 09 66 NZ $ av 36 UK pence July 09 40 p NZ $ av 0.50 Euros July 09 0.46 Last 12 months (July) UK +4% US $ -5% EU -2%
What Does An Exchange Rate Mean? US $100 = @80 cents exchange rate = NZ$125.00 @55 cents exchange rate = NZ$181.80-31% Difference = NZ$56.80 +45%
Exchange Rate to Sept 2010 Two views 0.80 0.75 0.70 0.65 Commodity linked 0.60 0.55 0.50 Economic Fundamentals 0.45 0.40 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Conservatives Optimists Source: Meat & Wool New Zealand Economic Service
NZ:US $ vs. West Texas Crude NZ:US $ 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 160 140 120 100 80 60 40 20 0.00 2000 Jun 2000 Dec 2001 Jun 2001 Dec 2002 Jun 2002 Dec 2003 Jun 2003 Dec 2004 Jun 2004 Dec 2005 Jun 2005 Dec 2006 Jun 2006 Dec US$ per Barrel 2007 Jun 2007 Dec 2008 Jun 2008 Dec 2009 Jun 0 US $ West Texas Crude Source: Meat & Wool New Zealand Economic Service www.economagic.com
Wool Lamb, Beef and Milksolids Farm price, per kg 600 500 Dairy x 400 Wool y Lamb 300 Beef 200 1998-99 1999-00 2000-01 2001-02 2002-03 Linear (W ool) 2003-04 2004-05 2005-06 2006-07 2007-08 Linear (Mliksolids) 2008-09p 2009-10e Linear (Lamb) Linear (Beef)
Raw Wool Exports 2008-09 Crossbred Wool Exports (000 Tonnes Clean, June Year, 11 months) Other Mediterranean North America Middle East Pacific (Aust.) Southern Asia Northern Asia European Union 30% volume; 31% 35% volume; 35% 0 10 20 30 000 tonnes Source: M eat & Wool New Zealand Economic Service
Crossbred Wool Price Trend Cents per kilogram clean 600 550 500 12 month av. Cents Per kg 450 400 350 300 250 200 333 2000 Jun 2001 Jun 2002 Jun 2003 Jun 2004 Jun 2005 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 290 Source: Meat & Wool New Zealand Economic Service
Wool price Trend 2,000 Wool Market Indicator Prices Cents per kg Clean, June Yr. 1,800 1,600 Fine (<24m) 12 mth av. Wool Production Cents per kg 1,400 1,200 1,000 800 600 400 200 0 M id (24-31m) Strong (>32m) 1,060 300 540 Fine 4% Medium 6% Strong 89% Dag 1% Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Total 100% Clean Tonnes153,500 Source: Meat & Wool New Zealand Economic Service
NZ Lamb Export Markets 2007-08 Lamb Exports (000 Tonnes Shipped, Sept Year) Pacific Other Middle East North America North Asia European Union 50% volum e; 64% value 0 50 100 150 200 Source: Meat & Wool New Zealand Economic Service New Zealand Meat Board
UK Retail Meat Prices 6.5 6.0 Retail Price per kg 5.5 5.0 4.5 4.0 3.5 3.0 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Poultry Beef Pork Lamb (all) Source: Meat & Wool New Zealand Ltd Economic Service TNS
Export Lamb Product Mix 1970-71 to 2008-09 Per cent 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1970-71 1975-76 1980-81 1985-86 1990-91 1995-96 2000-01 2005-06 2006-07 2007-08 2008-09p Chilled Frz Boneless Frz cuts Frz carcases Source: Meat & Wool New Zealand Economic Service
Export Lamb $ per head $ per hd 100 90 80 70 60 50 40 30 20 10 2009-10? 1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 $/Hd $/Hd Real 2004-05 $s Line 3 Source: Meat & Wool New Zealand Economic Service Sheep and Beef Farm Survey 2006-07 2008-09p
Export Lamb $ per head Trend All Grades 100 90 $88.80 p $ per head 80 70 60 50 40 12 month av. $53.60 $80.00 e 30 2000 Jun 2001 Jun 2002 Jun 2003 Jun 2004 Jun 2005 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun Outlook: In market prices OK, Exchange rate negative impact Source: Meat & Wool New Zealand Economic Service
NZ Beef Export Markets 2007-08 Beef and Veal Exports (000 Tonnes Shipped, Sept Year) Pacific EU Other South Asia North Asia North Am erica 27% Volume; 29% 53% Volume; 45% Value More high value beef More process beef 0 50 100 150 200 Source: Meat & Wool New Zealand Economic Service New Zealand Meat Board
2007-08 Beef Exports Sept Year 000 Shipped Tonnes 220 200 57% 180 160 140 34% 120 100 80 60 40 9% 20 0 Shipped Tonnes $FOB per Kg Processing Secondary Cuts Prime Source: Meat & W ool New Zealand Economic Service 12.00 11.00 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 $FOB per Kg
Export Beef tonnages Carcase Weight 700,000 600,000 500,000 tonnes 400,000 300,000 200,000 100,000 0 2007-08 2008-09 2009-10 2010-11 Cow Bull Str & Hfr Source: Meat & Wool New Zealand Economic Service 2011-12 Increase in cow + bull beef +18% 51,000 T
US Bull Beef Price Quotes 95 CL 600 c/kg 500 400 300 difference NZ:US exchange rate NZ -16% Jul 2008 to Jul 2009 US -27% Jul 2008 to Jul 2009 200 2005 Jun 2005 Sep 2005 Dec 2006 Mar 2006 Jun 2006 Sep 2006 Dec 2007 Mar 2007 Jun 2007 Sep 2007 Dec 2008 Mar 2008 Jun 2008 Sep 2008 Dec 2009 Mar 2009 Jun US c/kg NZ c/kg Source: Meat & Wool New Zealand Economic Service
Export Bull Beef per kg Trend 270 295 kg Cents per kg 500 475 450 425 400 375 350 325 300 275 250 225 200 12 month av. 308 349 p 300 e Exchange Rate Sensitive 2000 Jun 2001 Jun 2002 Jun 2003 Jun 2004 Jun 2005 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 2010 Jul Source: Meat & Wool New Zealand Economic Service
Bull Beef Price 1 cent US change per pound = ± 2.6 cents per Kg carcase weight NZ [$7.80 per head] 1 cent US:NZ Exchange Rate Change = ± 3.3 cents per Kg carcase weight NZ [$9.90 per head] Source: Meat & Wool New Zealand Economic Service 14 July 2009
Milksolids per kg Trend Real 2004-05 $s 900 800 700 Cents per kg 600 500 400 300 Av. 434 200 100 0 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09p 2009-10e Milksolids per kg Milksolids per kg Real Av. Source: Meat & Wool New Zealand Ltd Economic Service Livestock Improvement Corporation, Fonterra
Sheep & Beef Farm Profit before Tax per Farm, Constant 2004-05 $s 140,000 120,000 NZ:US$ 42 100,000 80,000 1990s decade av. $44,800 60,000 40,000 20,000 2000S decade av. $62,900 0 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 Real Farm Profit 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09p 2009-10f Source: Meat & Wool New Zealand Economic Service Sheep and Beef Farm Survey, All Classes Farm Lowest in 50 years NZ:US$ 77
Sheep & Beef Farm Input Prices Paid trend Index 1990-91 = 1,000 1,800 1,600 1,400 1,200 1,000 2004-05 to 2009-10 +26% 800 1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09p Prices Paid Base = 1000 Source: Meat & Wool New Zealand Economic Service
Gross Revenue Vs Fertiliser Expenditure $ per hectare All Classes Sheep and Beef Farm 600 60 Gross Revenue $ per ha 500 400 300 200 100 50 40 30 20 10 Fert Exp $ per ha 0 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09p 2009-10f 0 Gross Revenue Fert Expenditure
Fertiliser Expenditure vs Volume Index 1990-91 = 1000 All Classes Sheep and Beef Farm Kg per Ha 180 160 140 120 100 80 60 40 20 0 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09p 2009-10f 60 50 40 30 20 10 0 $ per ha Kg per ha Fert Expenditure
Summary Biggest uncertainty is the Exchange Rate. Overseas markets reasonable for lamb Beef outlook function of US recession Wool outlook by recession and demand
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