skip to content1
Just a heads up, our public website ( will be offline for scheduled maintenance between Midnight and 8:00am on Sunday, 21st April 2024. We apologise for any inconvenience.

Annual Withholding Tax Certificates for Rabobank Online Savings customers are now available.

Invoice scams are increasing. When receiving invoices, verify any new account numbers with the recipient over the phone using their publicly listed number, before making any payment. Please see our security page for more information.

The impacts of China’s COVID lockdowns on New Zealand agriculture

Current strict lockdowns in many major cities in China – as the country tries to eradicate the spread of COVID – are not only affecting its local citizens, but also having flow-on impacts on trading partners, including New Zealand, according to agribusiness banking specialist Rabobank.

Speaking in a recently-recorded podcast, What’s the impact of China’s Lockdown Wave?, RaboResearch general manager for Australia and New Zealand Stefan Vogel said, in particular, there are four specific impacts of the lockdowns that are set to have increasing ramifications for New Zealand agribusiness – disruptions to freight logistics, Chinese corn plantings, dairy demand and hog pricing.

Freight logistics

“The already-stressed global container logistics situation is becoming more complicated due to massive delays around the Shanghai port,” Mr Vogel said.

Stephen Vogel, General Manager, RaboResearch AU & NZ

Stephen Vogel, General Manager, RaboResearch AU & NZ

“The dry container index, which tracks average prices paid for the transport of dry bulk materials across more than 20 international routes, increased five-fold through 2021 as a result of COVID lockdowns in different parts of the world. While the index has since declined and is down 16 per cent since early March and 25 per cent down from the September 2021 highs, it looks likely that the massive ongoing COVID lockdowns in China will add to continued container logistics issues and keep container freight prices well above historic levels for 2022 and also likely to remain elevated well into 2023.”

Corn plantings

Mr Vogel said disruptions to corn plantings in China – the world’s second-largest corn producer and also the world’s primary corn importer – were also raising more concerns in an already extremely-tight global grains markets.

“Chinese corn planting faces delays in two key provinces as some farmers are trapped in major cities and are unable to access their fields due to the COVID lockdowns,” he said

“We understand the lockdowns have created delays in planting this important feed crop in some parts of Jilin and Liaoning provinces, and these two provinces account combined for 20 per cent of China’s corn acreage.

“The delay in planting increases the risk of frost damage later in the season, but at this point it is too early to say what the impact will be on yields. It will depend on the weather through the season.”

Mr Vogel acknowledged though that the delays in planting Chinese corn –and China’s feed grain import needs more generally – were not the biggest driver of current global grain prices.

Rather, world Chicago Board of Trade (CBOT) corn prices had hit a 10-year high in April this year and remain above USD 8/bu, driven primarily by concerns about the early arrival of the dry season in Brazil and below-normal rainfall forecast for the next three months which could reduce Brazilian corn yields.

In addition, cool and wet conditions for corn planting in the US and an expected reduction of about 50 per cent in Ukrainian corn production (as well as export uncertainty from Ukraine) in 2022 were also putting upward pressure on global grain prices, he said.

“Global feed grain prices are expected to remain very high over the course of 2022 and result in higher production costs for livestock farmers the world over – particularly those in the Northern Hemisphere.”

Dairy demand

The spread of the Omicron variant and China’s “dynamic zero-Covid” policy were also bringing strong headwinds to consumption in the country’s food service sector, Mr Vogel said. And this was playing out in reduced dairy demand.

“Dairy demand in food service is slowing in China while, according to our calculations, dairy products in China produced from imported Oceania whole milk powder (WMP) are now more expensive than those from locally-produced dairy for the first time in eight years,” he said.

“After a record-breaking 2021 in milk powder imports by China, the demand uncertainty from COVID restrictions is likely to dampen the ‘dragon’s’ import appetite slightly in 2022.”

Hog pricing collapse

In addition, China’s COVID restrictions had resulted in a big drop in food service sales of meat products, as well as supply chain disruptions, which had impacted hog production and prices, Mr Vogel said.

“Chinese hog producers have liquidated herds to avoid further losses, imposing further downward pressure on Chinese pork prices which can also impact China’s feed grain import needs,” he said

“This hog herd liquidation also has potential implications for Chinese beef and sheepmeat demand. Retail prices in China for both beef and lamb are currently at record highs, and New Zealand exporters will be keeping a close eye on how demand for these products holds up as consumers potentially look to trade down to pork and other cheaper animal proteins alternatives.”

RaboResearch’s podcast What’s the impact of China’s Lockdown Wave? can be accessed here.

Rabobank New Zealand is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 120 years’ experience providing customized banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 36 countries, servicing the needs of about 8.6 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country's leading agricultural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 30 offices throughout New Zealand.

Media contacts:

David Johnston
Marketing & Media Relations Manager
Rabobank New Zealand
Phone: 027 477 8153

Denise Shaw
Head of Media Relations 
Rabobank Australia & New Zealand 
Phone: +612 8115 2744 or +61 2 439 603 525