Global uncertainty worries Meatco
Meatco says with the current global trends, the economy is likely to go into a recession and job losses will grow across markets.
ELLANIE SMIT
WINDHOEK
Factors outside Meatco's control can influence returns for 2020, with the coronavirus pandemic having closed nearly all export markets, the company says.
Although there are strategies in place to offset risks, market options are restricted, Meatco added.
“The global market is constantly changing, and people must be fed, therefore consumption will continue, although using different channels.”
Meatco said with the current global trends, the economy is likely to go into a recession and job losses will grow across markets, with oil prices having a major impact on Norwegian prices.
“The global stock market volatility will cause nervousness.”
Drought impact
Furthermore, the 2019 drought severely affected the quality of cattle marketed.
According to Meatco, instead of the A, AB and B grades making up 75% of the cattle mix budgeted for, the quality realised was much poorer. The actual cattle mix saw 55% of Meatco's slaughter capacity comprise low C grades.
Despite this, the 2020 slaughter budget forecasts a return to the normal 75% A, AB and B grades and 25% C-grade animals for export markets, it said.
The company added that Europe has many low-quality cattle priced approximately 35% below the best quality animals. “Therefore, price realisation would inevitably suffer when overall quality falls significantly.”
New markets
According to Meatco, new markets offer greater access opportunities for products in 2020, which promise significantly higher returns from the Chinese and the American markets. China contributes via bone-in products.
“These markets, which were not entirely open for most of 2019, are now fully open and operational for 2020.”
Both the Chinese and American markets currently return higher prices than the traditional South African, European Union and United Kingdom markets.
According to Meatco's forecasts, the Chinese and American markets will account for a significant amount of all international export volumes this year.
“The global landscape is currently unpredictable. However, the only certainty is that the current global uncertainty will continue for some time and food will remain essential and in demand.”
WINDHOEK
Factors outside Meatco's control can influence returns for 2020, with the coronavirus pandemic having closed nearly all export markets, the company says.
Although there are strategies in place to offset risks, market options are restricted, Meatco added.
“The global market is constantly changing, and people must be fed, therefore consumption will continue, although using different channels.”
Meatco said with the current global trends, the economy is likely to go into a recession and job losses will grow across markets, with oil prices having a major impact on Norwegian prices.
“The global stock market volatility will cause nervousness.”
Drought impact
Furthermore, the 2019 drought severely affected the quality of cattle marketed.
According to Meatco, instead of the A, AB and B grades making up 75% of the cattle mix budgeted for, the quality realised was much poorer. The actual cattle mix saw 55% of Meatco's slaughter capacity comprise low C grades.
Despite this, the 2020 slaughter budget forecasts a return to the normal 75% A, AB and B grades and 25% C-grade animals for export markets, it said.
The company added that Europe has many low-quality cattle priced approximately 35% below the best quality animals. “Therefore, price realisation would inevitably suffer when overall quality falls significantly.”
New markets
According to Meatco, new markets offer greater access opportunities for products in 2020, which promise significantly higher returns from the Chinese and the American markets. China contributes via bone-in products.
“These markets, which were not entirely open for most of 2019, are now fully open and operational for 2020.”
Both the Chinese and American markets currently return higher prices than the traditional South African, European Union and United Kingdom markets.
According to Meatco's forecasts, the Chinese and American markets will account for a significant amount of all international export volumes this year.
“The global landscape is currently unpredictable. However, the only certainty is that the current global uncertainty will continue for some time and food will remain essential and in demand.”
Comments
Namibian Sun
No comments have been left on this article