ANZCO Foods Market Update - August 2025

It was great to see so many farmers join the ANZCO team in Methven, Gore and Hunterville during the past month. Hopefully those of you who were there got some useful information and insights around ANZCO’s performance, global markets and the wider geopolitical dynamics that continue to add more volatility. I look forward to seeing another great turnout at our Havelock North event next Thursday 21 August.  

When it comes to current market conditions, price levels being achieved across beef and lamb markets remain very strong on the back of tight supply conditions.

The US remains the focal point for the global protein market, with the well-publicised confirmation that we will face an increased tariff of 15% on all New Zealand origin beef and lamb exported to that destination. I mentioned at our recent farmer meetings that clarity was more important than the actual number in many respects, as the uncertainty that had been created during recent months had caused us more issues than the tariff itself. Nonetheless, an increase – while not surprising – was disappointing, and even more so was the fact that the Australian industry managed to keep their level at the original 10%, thus giving them a theoretical 5% advantage in the marketplace. It is all well and good for the government to now be in Washington trying to negotiate a better deal – and all power to them – but it is hard not to feel that this is all a bit too little too late. I certainly hope I am proved wrong!

The other interesting announcement was the Administration following through on its threat to apply an additional 50% tariff on Brazilian imports. For beef, this immediately takes the US out of the equation for Brazilian exporters. In theory, this is a very positive development for NZ beef exporters, with Brazil having been the largest source of beef entering the US in recent months. To have that volume immediately taken away from buyers means supply will tighten considerably and will drive more demand and higher returns for our product.

However, it is not set in stone just yet that this prohibitive tariff will end up being applied. There were a large number of exemptions attached to the US announcement and while beef was not one of them, there will no doubt be considerable lobbying going on behind the scenes to get it added to the list. From the Administration’s perspective, there would arguably be a strong case to allow that change and keep Brazilian beef flowing into the market, with food inflation a massive political issue in the US, beef is leading the charge on that front. With the fundamentals within the US domestic industry still all pointing towards a massive shortage of product and even higher prices in 2026, it may be politically expedient for the Administration to ensure that Brazil maintains viable access. We will see what happens in the coming weeks.

Putting that uncertainty to one side, it would be fair to say that lamb will be more likely to be adversely impacted by the additional cost of doing business. A lot of our product ends up in the restaurant trade, and latest reports out of the US show that the foodservice channel is doing it tough as the higher price of food, a tightening labour pool, and nervous US consumers choosing to eat out less, are having a big impact on the profitability of many players in the sector. Lamb is an easy target for restaurants looking to keep their menus as cost competitive as possible, and that will be bad news for our business moving forward if we are looking to increase prices further to cover the extra 5% tax.

China continues to struggle with the high prices we are seeing elsewhere in the world. This is not quite so much of an issue for our lamb business, as we ultimately need China for a certain portion of the carcass and thus will follow the market accordingly, but on beef it has fundamentally changed our business model and will continue to present challenges for the balance of the year. This is reflected in the latest annual export numbers. For the 12 months ending 30 June, 45% of total sheepmeat volume exported from New Zealand was still ending up in China. This was still 11% down on the previous 12-months, but a share of that is likely tied up with a decline in animal numbers rather than product finding alternative homes. On beef however, the industry only sent 26% of our exported volumes into China during that same 12-month period, down 32% versus the year prior, which is a direct result of the reallocation of product away from China into North America.

Outside of these two cornerstone markets, the rest of the world is comparatively quiet. Europe and the UK are in the depths of their summer holidays and sales are slow as a result, which is only accentuated by our own seasonal limitations, which means volumes are naturally less available. Nonetheless it is becoming increasingly clear that our continued push on lamb pricing is having an impact on our customers appetite to commit. This will be one to watch when both markets get back to business at the end of this month. I think that we will inevitably face some degree of weakening in the values we have been able to achieve in recent weeks, but with tight inventory levels in New Zealand we should be able to manage a ‘soft landing’ and keep consumption ticking over as we look ahead to the start of the new production season. Beef demand remains more robust in this part of the world, again driven by tight supply and the focus on US demand.

After a tough first half of the year, the Japanese market has been showing some positive signs of life of late. Contrary to what we are seeing globally, there’s probably more upside around lamb than there is on beef currently – although our grain-finished Ocean Beef brand continues to do well – with importers aware of the challenges being faced in New Zealand meaning they are eager to secure ongoing supply of racks and shoulders as they look towards their higher consumption period after the current summer heatwaves.