Does Brazil’s China market suspension spell opportunity for Australian beef?

Beef Central, 27/02/2023

January’s Australia Day barbecue in Shanghai saw the True Aussie Beef and Lamb logo appear on selected products as part of the Australia Day campaign which combined online and offline activities designed to celebrate Australian beef and lamb ahead of Chinese New Year.

AUSTRALIAN export meat traders have not yet detected any great rise in buyer interest out of China, following Brazil’s suspension in beef trade to China on Thursday.

However that was likely to change rapidly if Brazilian beef was still suspended from the China market in two or three weeks, large exporters told Beef Central this morning.

As part of its trade agreement with China, Brazil late last week voluntarily suspended beef trade after detecting a possible atypical case of BSE in a breeding cow. The Brazilian processing plant where the animal was found was apparently not China-listed.

A similar event happened in 2021, with two Brazilian atypical BSE cases discovered in cattle in September that year. In that event, Brazil’s trade into China did not resume for almost four months, well into December.

Any lengthy absence of Brazilian supply into China could have profound effects on global beef supply and demand, traders say. Of China’s total 2022 beef imports of 2.7 million tonnes, Brazil was by far the largest contributor, accounting for 41pc, or about 1.1 million tonnes. Conversely China represented a huge 62pc share of Brazil’s 2022 beef exports.

“If the suspension last for only a few days, it will have little effect on global meat trade. But if it lasts for multiple weeks or months, as it did last time, it will start to have a very significant impact,” a large Australian exporter said this morning.

“There’s certainly been buying interest from customers in China this morning (Monday, Australian time), but to be honest, that rising trend has been in place since the start of February, after Chinese New Year,” he said.

“It’s hard to attribute any of that to kneejerk over last Thursday’s removal of Brazilian beef supply.”

Several contacts said Brazil had handled its latest BSE disclosure a lot more professionally than the cases seen two years ago, when there were lengthy reporting delays after two cases of atypical BSE was detected.

Some saw the delay in Brazil’s return to the China market as a message from Chinese authorities.

“We suspect that Chinese officials were not pleased by reports that Brazil’s 2021 BSE cases were reported with a significant delay,” Steiner Consulting’s Daily Livestock report said on Friday.

“There was a clear reporting requirement in place, which in true Brazilian fashion, they chose to ignore. Its widely believed that that was part of the reason why China delayed Brazil’s re-entry,” another trade source told Beef Central.

“This time, Brazil has reported its detection swiftly. It will be interesting to see how Chinese authorities respond.”

Closer relations

Others have pointed to Brazil’s new president Luiz de Silva, who is said to be far more aligned with China than his predecessor, as a factor in the rate of recovery of market access.

Even prior to the China market suspension, Brazil had scheduled a high-level mission to China in March this year, during which the beef market access issue may arise.

Formal World Organisation for Animal Health (WOAH, formerly OIE) verification of Brazil’s BSE detection is expected some time this week.

“Given it is one case only, and Brazil has followed the rules this time, the common view is that the latest access suspension will be only short lived,” one large Australian export trade source said.

“The length of the suspension will be critical in the impact.”

Could plant suspensions end?

The news of Brazil’s suspension in China trade quickly rekindled speculation last week that China might lift suspensions on a string of Australian meat processing plants over documentation inconsistencies and alleged residue contamination, to help underpin supply.

“There’s widespread belief that Australia will get some de-listed plants back in supply some time this year,” an export trade source said.

“But the Chinese will come when they are good and ready. You can’t second-guess the Chinese administration, and the less we talk about it and speculate about it, the better,” he warned.

The most likely ‘first round’ of Australian re-listings are seen to be the three plants suspended in 2021 over COVID contamination concerns in frozen meat imports, including JBS Brooklyn, Australian Lamb Co and Teys Naracoorte.

“We’re certainly seeing more engagement, politically between the governments in Australia and China. That’s a start,” the export contact said.

Daily Livestock Report on Friday pointed out that reports of BSE cases in Brazil are not new. The country reported BSE cases in 2012, 2014, 2019 and 2021.

“But reports of BSE cases are not confined to Brazil. Since 2010, there have been three atypical cases in the US, in 2012, 2017 and 2018. Canada also last reported a case of atypical BSE in 2015.

“An atypical form of the disease means that it occurred spontaneously. It was a result of the age of the animal rather than by consuming infected material. This is important, because classical cases would suggest a breakdown in the control systems and the risk to human health.

“OIE classifies Brazil as having a negligible risk for BSE. Now the US may disagree and decide to stop imports of Brazilian product. But we can’t do that while at the same time asking that other countries abide by international norms and rules,” Len Steiner wrote in Daily Livestock Report.

“If Brazil’s trade suspension ends in March, the impact on global trade will be minimal,” DLR said.

“China may buy a few more loads from the US but much of the lost business will likely be made up in April and May.”

“China accounts for 60pc of the fresh/frozen beef that Brazil exports to the world, while Brazil accounts for 40pc of the beef that China imports. Neither country can replace the other, and so there is a strong incentive to resolve this case quickly.”

It was not a coincidence that when Ireland discovered a BSE case, it took more than a year to regain access to China. Ireland was not a significant supplier to China.

MLA’s take on Brazil’s export suspension

Meat & Livestock Australia said Brazil’s last beef trade suspension into China in 2021 did not have an appreciable impact on Australian beef prices, as Australian exports to China were limited, and most Australian beef is exported to markets that Brazil does not have market access to.

“Since the suspension in 2021, Brazilian exports to China have grown to be the largest single trade flow in the world, affecting the global commodity price,” MLA said.

Depending on the length of the import ban, some of Brazil’s beef was likely to be exported to countries without export controls on BSE, but some was likely to be redirected to the domestic Brazilian market, which has seen domestic consumption steadily fall as exports to China have grown.

“As that beef will effectively be taken out of the global trade, this import ban may result in a drop in global supply, depending on how long imports are restricted,” MLA said.





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  1. Lachlan, 28/02/2023

    So long story short the best way to increase market access is to allow the Chinese to claim any issues have been resolved by not putting pressure on them so they don’t lose face by being seen back flipping or backing down.

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