WHILE the heat remains out of the Chinese export market, the Australia sheepmeat and wool markets can expect to benefit from a long-term forecast of booming online grocery growth in Asia.
Rabobank’s wool analyst, Georgia Twomey, told the World Merino Insight conference in Adelaide, the "new normal" in Asia would see their influence continue to strengthen in sheep markets. However economic risk factors would remain at play.
Following 18 months of slower economic growth in China, Ms Twomey said Asia would maintain its position as the dominate importer of wool and sheepmeat.
Ms Twomey said the opportunities presented by the Asian powerhouse region came with cautionary risks, as competition heats up and economic uncertainty continued.
The enormous boost in demand from 2013-2014 became nearly 40 per cent of New Zealand’s export market, which has been a double edged sword since demand slowed and impacted prices.
Ms Twomey said diversification of markets remained a useful strategy to help mitigate volatility, although difficult for wool processing with 75pc of Australian raw wool exported to China.
“We’ve seen demand pull back and NZ become very exposed to China – they’ve felt the brunt of that in a broad way,” she said.
“The Australian export profile has been a far more diverse exporter, enjoying the increase demand from China during this period but also we had incredible strength from United States, Papua New Guinea and the Middle East, as well as a strong domestic market which have underpinned our prices and markets.”
She said China had significant challenges ahead following softened economic growth since the global financial crisis.
“It’s an economy completely in transition - moving from industry and manufacturing driven economy towards a more consumer-led economy,” she said.
“Making sure consumers have disposable income to grow the economy will see a lot of policy changes.”
With retail sales growth at 10pc year-on-year - slightly back from the 2009 to 2014 annual average of 13pc – Ms Twomey said it would be an area of concentration for the government to urge people to continue to spend.
Asian clothing demand is expected to maintain a strong upward trajectory with international brands flocking to China with physical store presence and online.
She said the enormous growth of online grocery sales was expected to hit $180 billion in China by 2020.
“These online distribution channels gets a packaged product direct from Australia into Chinese homes and foodservices companies very efficiently,” she said.