October 17, 2024

 

Chinese beef prices are falling — here's why

As of August 7, 2024, the average wholesale price of beef in China was ¥59.25/kg (US$8.31), down 16.64% from ¥71.08/kg on January 7.

 

According to data from the National Bureau of Statistics of China, the price of beef (boneless whole meat) in the distribution market was ¥84.90/kg in early March 2023 and fell below ¥80/kg at the end of 2023. As of June this year, it plummeted to ¥67.13/kg (US$9.42).

 

Data from Chinabric.com show that in the 23rd week of 2024, the average price of live beef cattle in Shandong Province was ¥22.74/kg (prices were as low as ¥18/kg in some regions. As beef cattle farming has a break-even range of ¥24-28/kg (US$3.37-3.93), the price of beef cattle in most parts of the province continues to fall below the break-even line.

 

The decline in beef prices is the result of an imbalance between supply and demand.

 

According to data from the National Bureau of Statistics of China, in 2023, China's beef cattle output totalled 50.23 million heads, an increase of 1.84 million heads or 3.8% over the previous year. Beef production reached 7.53 million tonnes, an increase of 0.34 million tonnes compared with 2022.

 

However, beef imports also soared over the past several years. Data from the General Administration of Customs of China shows that, in 2016, the import volume of beef and beef offal was only 0.58 million tonnes; by 2023, it expanded to 2.77 million tonnes. Currently, beef import accounts for 27% of China's beef supply.

 

Since 2024, the amount of imported beef has continued to increase. The relentless rise in these imports is instrumental in dragging down Chinese beef prices.

 

Compared with the rapid growth in supply, China's beef consumption is relatively slow (in 2023, consumption was 10.27 million tonnes).

 

Last June, the General Office of the Ministry of Agriculture and Rural Affairs of China issued the "Notice on Stabilising the Development of Beef Cattle Production", which pointed out that since the beginning of 2024, the prices of live cattle and beef have continued to fall, with farms suffering losses. To stabilise the production capacity of beef cattle, local organisations are encouraged to implement initiatives concerning the monitoring of breeder cattle quality and improving the grain-to-feed ratio.

 

While the Chinese government supports domestic beef cattle breeding in terms of policy, rising import volumes will have more impact on China's beef prices.

- Shi Tao, eFeedLink