Competitor watch: Three months on, Brazilian beef still excluded from China market

Jon Condon, 03/12/2021

THREE months after Brazil voluntarily suspended its beef exports to China after BSE detections, it remains locked out of the world’s biggest imported protein market.

Brazil suspended beef trade to China on 4 September after tests on two suspect animals confirmed cases of atypical BSE.

Based on the outcome of a previous BSE episode in Brazil in 2019, many anticipated trade with China would likely re-open within two weeks, creating relatively little disruption to supply.

“Although disruptive, it is unlikely the restrictions will last very long,” Meat & Livestock Australia told stakeholders back in September.

“The last instance of Atypical BSE in Brazil was resolved within 10 days, and given China’s reliance on Brazil to fulfill beef volumes and China taking 60pc of Brazil’s beef exports, both countries are incentivised to amend this as quickly as possible.”

Eighty-seven days after the original shut-down, trade has still not resumed.

The closest Brazil has got gotten to trade recommencement came earlier this week, when Chinese authorities agreed to allow Brazilian beef held in storage, packed prior to the September 4 closure, to be released for sale in China. Some onlookers have seen this concession as the first step in a restoration process in trade.

Trade sources said as many as 3000 40-foot containers of Brazilian beef bearing pre-September 4 production date certificates might have been released, which might sate China’s demand for a short period, at least.

Brazil’s three-month absence from the China market has created the biggest void in global beef trade seen this year. It’s role was made all the more significant by China’s ongoing battle with African Swine Fever in its pork industry.

Brazil accounted for almost 40pc of China’s January-October beef imports, of 1.97 million tonnes, with Brazil share accounting for 758,700t. Conversely, from Brazil’s perspective, China accounted for 58pc of all its exports up to September this year, amounting to 1.6 million tonnes.

To put this into some context, Australia’s entire beef exports to all markets this year will struggle to exceed 900,000t.

Brazil’s overall beef exports plummeted during October as a consequence of the China suspension. October export sales plummeted to 8200t, down from 112,000t the month before.

Some analysts speculate that the beef suspension, now approaching its fourth month, is a strategy by the Chinese to lower Brazilian meat prices which were rapidly climbing. The price of fat cattle in the Brazilian market since the suspension started has fallen about 20 percent, according to South America’s Merco Press.

On top of the Brazil suspension issue, second largest China exporter Argentina, which directed 68pc of its 750,000t total exports last year into China, is still only partially back in business.

So what has happened to Brazil’s beef surplus, in the absence of China.?

Some anticipated volumes to rise sharply into the US, especially in the absence of high Australia beef production and export this year. Meat traders said while there has been a modest rise in South American importted volume into the US this year, it has not been particularly significant.

Trade sources say that while there has been a modest rise in Brazilian volumes into the US since September, it is nothing like the volume some had anticipated earlier.

Australia’s own exports to China have shown little change, in the absence of competition from Brazil since September. As reported in yesterday’s monthly exports summary, Australia’s exports to China in October reached only 13,157t, much the same as this time last year.

Similarly, the US was seen as a possible substitute for some Brazilian and Argentinean volume since September. But unlike Australia, the US processing industry is primarily focussed on chilled meat (for domestic consumption), not frozen. China remains a predominantly frozen meat market, making it more difficult for US to compete, especially from HGP-free product stipulated by China.

While exports of beef produced on or after September 4 remain suspended, the Brazilian government and industry expressed optimism in local media reports this week about the suspension being lifted.

Brazil’s department of agriculture said it had already forwarded all the documents requested by the Chinese authorities, to resume beef exports.

Brazil’s agriculture minister Tereza Cristina told media that she was hopeful that Brazilian beef exports will resume to China some time in December.




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