Forestry, meat sectors bear brunt of coronavirus impact - report

A new commodities report says the New Zealand forestry and meat sectors are bearing the brunt of the impact from the coronavirus outbreak.

ASB senior rural economist, Nathan Penny said it had been a case of one step forward, two steps back.

"Just when it seemed that the outbreak was beginning to settle in China, the outbreak has spread rapidly to Europe, the Middle East and other parts of Asia. 

"Similarly, for New Zealand commodities there has been good news and bad this week," said Penny.

Penny said the good news had largely come from the dairy sector, with Fonterra reaffirming its 2019/20 milk price forecast range of $7.00-$7.60/kg as well as its earnings guidance. 

The dairy giant revealed that while there had been a slow-down in processing at ports in China, product was continuing to be cleared by customs and quarantine officials.

However, while the dairy sector was proving resilient, the forestry and meat sectors were bearing more of the outbreak's brunt. 

"Notably, the ASB Commodity Price Index shows a 9.4 percent slide in forestry prices in USD terms this week."

Meat prices also slid a further 3.9 percent last week, taking the fall in the month to date to 9.5 percent, although some of that fall was seasonal and drought-related. 

Despite the dominance of dairy on the commodity index and dairy's relative resilience, Penny sounded a note of caution. 

"The rapid spread of the virus beyond China poses new and different risks to NZ commodity prices and thus requires ongoing vigilance in coming weeks, if not, months."

The Forest Industry Contractors Association estimates about 30 percent of the country's logging crews were unable to work due to supply chain disruption in China, meaning nationwide up to 1500 forestry workers were out of work.

Meat processors were also affected, as Chinese authorities restricted movements to try and contain the virus.

"Basically the logistics aren't happening in terms of unloading ships, there's a whole range of difficulty in getting the products through to the market, Federated Farmers vice president Andrew Hoggard told Newshub.