Jan 30, 2025
Velvet market conditions remain challenging in the midst of this complex season. While the major market access issue was remedied, meaning MPI could issue export certificates from 31 October, some buyers used the issue this season to drive down prices. DINZ continues to hear rumours of concerning behaviour by some in the market, trying to further destabilise the market.
Farmers are encouraged to remain in close contact with their longstanding buyers, particularly those with long-term investment in the industry, so they may fully understand the entire situation and make the most informed decisions possible.
“While we were heartened at different times this season by some buyers offering slightly higher contracts than when the season opened in a bid to lift prices for the producers, the fact remains the season hasn’t delivered the kind of results we were looking for when the season began,” says DINZ CEO Rhys Griffiths.
“Enough of last season’s inventory, stockpiled by a single seller, has been sold off since the beginning of the season, and those pressures are still being felt. Early weak selling at prices well below what some exporters had initially expected set the tone and made it extremely difficult to lift. In October, many buyers had commented that the season should start at last season’s prices.”
“When evaluating the season, however, we should not underestimate the value of market access now secured in China, as this allows us to pursue partnerships with companies like Beijing Tong Ren Tang and Dong E Ejiao. These relationships represent a big part of New Zealand velvet’s future in China, though we acknowledge that this season has been quite challenging for our producers.”
“Mixed messaging on the ground and in the market by some opportunistic traders has dampened prices, and confidence will take time to repair,” says Tony Cochrane, DINZ board member and PGG Wrightson national deer and velvet manager.
“When we add political and economic concerns in the two main markets, we end up with a cocktail of uncertainty. Velvet importers will benefit from the lower NZ dollar, as well as the opportunity to source lower priced product as their respective economies improve. A further benefit will be the fact that New Zealand velvet becomes more accessible to the China market with the improved trade protocol.
“However, producers have an immediate choice to make to curb our increasing NZ production: cull harder or cut earlier to stir up market demand.”
