July 20, 2023

Chinese beef consumption below expectations, prices fall for Brazilian exporters

According to a report by Datagro sourced from China's Ministry of Agriculture and Rural Affairs, beef consumption in China is lower than what Brazilian exporters had anticipated for the post-pandemic period, falling below CNY 72 (~US$9.96; CNY 1 = US$0.14) per kg in recent days, MercoPress reported.

At the beginning of the year, Brazilian beef imports were CNY 78 (~US$10.79) per kg.

Joao Otavio Figueiredo, a research leader at Datagro Pecuáaia, said that Chinese demand usually rises in the second half of the year, with around 60% of the total volume imported during this period. Importers typically accumulate stocks in preparation for the Lunar New Year, the most important holiday in the country.

The increase in volume has not translated to better prices. Figueiredo cites the example of Argentina, which performed well during the Brazilian embargo but did not witness an improvement in prices.

Additionally, the appreciation of the Brazilian real against the dollar has made Brazilian products more expensive in the international market. The price of one metric tonne of beef dropped from over US$7,000 in the middle of last year to approximately US$5,000 last month.

Figueiredo noted that some Chinese buyers are even looking to negotiate at US$4,500. As a result, the industry will have to adjust to this price drop to remain competitive in exporting cattle.

Looking ahead, Figueiredo predicts the arroba do boi (a Brazilian unit of weight for live cattle) to reach BRL 270 (~US$56.29; BRL 1 = US$0.21) in October. However, in a worst-case scenario, it could drop to around BRL 250 (~US$52.12) per arroba, representing a decline of BRL 100 (~US$20.85) compared to 2022 levels.

-      MercoPress