April 14, 2020
Beef exports to China expected to decrease
The global beef industry is affected by COVID-19 imposed closures of hotpot chains, restaurants and steakhouses after major exporter boosted supplies to meet increased demand from China, reported Reuters.
China is the second biggest market for beef in the world after the United States because of increased incomes. Beef imports have increased 20% a year over the last five years.
Consumers in China switched to beef after the African swine fever scare that was first discovered in August 2018.
In 2019, beef exports to China reached 1.7 million, a 60% increase compared to the year before. Analysts and industry sourcessaid about 70% of beef consumption is attributed to restaurants.
However, demand has dropped for beef, according to a trader with a state-owned company that sources beef from Brazil, Argentina and Uruguay. The trader is currently purchasing beef at about 30% of levels from 2019.
Many beef supplies are still stuck in cold storage after restaurants were closed mandatorily due to COVID-19 for six weeks beginning early February this year.
Income from the foodservice sector fell 43% in January and February 2020 to 419.4 billion RMB (~US$59.6 billion; 1 RMB = US$0.14), according to statistic bureau data.
Ambrose Cheung, Asia commercial manager at major Australian processor Bindaree Beef said demand for beef from the foodservice industry has fell 70 - 80%.
Cheung said even though retail purchase has increased, consumers buy cheaper beef cuts for home use.
Argentine exporters said beef exports to China in March decreased to only 15% of levels in late 2019.
Pan Chenjun, senior analyst at Rabobank said business is projected to rise once consumers feel safer about eating out once more, but a slowdown in China's economy can affect spending power for the purchase of more expensive beef cuts.
Fitch Ratings projected a fall of less than 2% in 2020 for China's economic growth. This is 6.1% lower than the rating estimated in 2019.
- Reuters
