Analyst Intel

1 April 2021

PULSE | Potential recovery for venison

Venison has sustained a weak run in export markets since the onset of covid-19 lockdowns made indoor restaurant dining largely unoperational, removing a key market for what is seen as a luxury meat. Recovery looked promising through the middle of 2020, when New Zealand was celebrating our own reopening, and European, UK and US markets were making noises about doing the same thing in time for the northern hemisphere summer.

However, right on the brink of the chilled venison production and export season (September-October), covid-19 case numbers began to build again in these key markets, prompting further shutdowns. From September to December venison average export values (AEV) followed normal market trends and lifted alongside an increase in chilled exports, albeit to a softer level than the past five years.

The venison AEV fell over in January, reflecting a readjustment in export volumes as frozen cuts took over from chilled. Recovery was evident in February, when the AEV strengthened by 11% to NZ$9.44/kg. This was driven by a 67c/kg increase in the frozen venison AEV, while chilled venison values reduced by $1.32/kg.

Despite the recovery, February’s AEV represents a $4/kg deficit compared to the five-year average value. This illustrates softer than usual demand from key venison export markets, with monthly exports reducing by 877 tonnes. This decrease was spread across export volumes to the US, Netherlands, Germany and China.

A drop in monthly export volumes is a snapshot of a year-long issue for venison. Compared to exports over 2015-19, venison exports to the EU and US have reduced by 8% and 11% respectively. This does not represent softer demand exclusively, but rather restricted availability of venison to these traditional markets, as opportunities for venison have developed in new markets. After playing a minor role in venison exports, volumes to China peaked in 2019 and only marginally reduced last year when they imported 1194t. Compared to the five-year average export volume over 2015-19, exports to China grew by 108% in 2020.

Lower demand is not the only factor contributing to overall softer export volumes.

Based on slaughter statistics from October 2020 to February 2021, venison processing rates have dropped by 15,885 head compared to year-ago levels. The total kill in this period was 150,770, with most of the downside in January-February. Arguably, an increase in the February AEV indicates building demand following January’s price readjustment as the market shifted from chilled stock to frozen.

Looking ahead to the 2021 chilled export season, there are some positive rumblings coming from within the NZ venison processing and exporting sector. Germany’s sustained battle with covid-19 causing them to jump in and out of lockdown is not ideal, however, European markets are still indicating good demand and vaccine rollouts are breeding confidence. At this stage, processors are projecting a farm gate price in excess of $7.00/kg for the chilled season, which is above 2020 prices, but lags behind other years and the five-year average of $9.04/kg.

Sarah Friel