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Ethanol Boom Raises Fears for Beef Sector

18 March 2008

NEW ZEALAND - Booming ethanol production in the United States could provide some short-term grief for New Zealand beef producers.

Weak returns and soaring feed costs have led to an increase in the US beef slaughter and a possible surge of beef on to the domestic market that could see demand for New Zealand beef imports drop and returns slide, according to the latest BNZ Commodities Wrap.

However, Meat & Wool New Zealand economic service executive director Rob Davison played down any crisis.

Mr Davison said bull beef prices, while down 12 per cent last month, were still strong and that New Zealand beef, promoted as grass-fed and lean, filled a niche in the critical US market.

About 60 per cent of New Zealand beef exports head to the US as low-grade manufacturing beef destined for the hamburger trade while the second-largest market, North Asia, took the higher value cuts.

"I don't think a spike in the US cattle kill will have much impact on us at all," he said.

Mr Davison said a reduction in the US cattle herd would have positive spinoffs for New Zealand, and outweigh any possible short-term grief.

The US beef industry was facing challenges on two fronts, with the drought forcing farmers to cull cattle at rates well above normal.

Source: Stuff.co.nz



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