Agricultural export prices are projected to remain strong in the face of U.S. tariffs; however, growing competition in New Zealand’s primary export markets could eventually exert downward pressure on prices.
According to Westpac industry economist Paul Clark, this season’s farmgate milk price will hold at $10.30 per kilogram of milk solids, while next season’s price is expected to ease slightly to $10, with some potential for prices to move higher.
He noted that these price forecasts are influenced by the New Zealand dollar’s response to the ongoing US trade war.
Meat prices are anticipated to rise further due to favourable supply and demand conditions, although, when adjusted for inflation, they are expected to remain close to their long-term averages.
Clark stated that the 10% tariff on New Zealand beef exports to the US is likely to be manageable, largely because US buyers have limited alternatives to the specific type of beef that New Zealand supplies.
Lamb prices are forecasted to rise, primarily due to increased demand from Europe and the Middle East.
Horticultural prices are also expected to remain high, with orchard gate returns for kiwifruit and apples projected to increase in the upcoming season.
Demand for building products
Demand for building products has come under pressure in contrast to agricultural export forecasts. According to Clark, “Export log prices are likely to move sideways this year,” reflecting a lack of significant upward or downward momentum. Furthermore, Clark warned that the ongoing trade war between the US and China could further reduce demand for logs, potentially putting additional pressure on prices.