Chinese Beef Imports Decline as Demand Slows and Stockpiles Grow

Chinese demand for beef slows. At the recently concluded Sial fair in Shanghai, Chinese importers, who are now trying to obtain new and significant reductions in the prices paid, have argued that there are voluminous stocks accumulated.

It is imported meat that is in the hands of the same importers, distributors and processors, and that until those stocks are not absorbed, the values ​​and volumes of imported meat will tend to fall.

The end of the restrictive “Covid-19 0” policy, decided last December, has brought a significant recovery in economic activity, but in the case of food servicewhich is the commercial channel that concentrates the demand for imported beef, it is observed that it is still far from pre-pandemic levels, with much fewer people on the street, less traffic, and with many restaurants, bars and gastronomic establishments closed.

The pandemic has left a deep psychological mark on the attitude of consumers, who are more cautious, who have spent their savings, who have cut many expenses and going out of the home, and who view the future with a certain pessimism.

In recent months, Argentine beef exports to China have remained relatively stable, with an increase in shipments to this destination from Uruguay and Australia, but with a very sharp drop in shipments from Brazil.

Precisely, the neighboring country placed only 41,000 tons in April, against some 100,000 tons per month that it sold in the months prior to the suspension –due to a case of BSE in Pará– and well below the peak of September last year. , which was 135 thousand tons. Brazil no longer has sanitary restrictions to access this market, but finds that demand from the Asian giant, at least in the short term, has fallen sharply.

After a year-on-year drop in the order of 30-35% in the amounts paid, Chinese importers – now after the Shanghai fair – are testing another wave of price drops, in some cases exceeding US$ 500 a year. US$700 per ton.

In recent months, if we take the sum of shipments to China from Brazil, Argentina and Uruguay, which comprise 70% of the Asian giant’s purchases, and we add exports from the United States and Australia, we can project that imports Chinese beef production would fall in the coming months to 170-180 thousand tons per month.

The retraction would be below May-June of last year (220-230 thousand tons) and further and further away from the import peak of July-August last, which was 270-273 thousand tons per month.

Last April, Chinese imports of beef fell to 183 thousand tons, 5% less than in April 2022.

According to Chinese importers, the stocks cumulative amounts of beef comprise hundreds of thousands of tons and would be equivalent to two or three months of imports. There is also an abundant supply of meat – at low prices – from Brazilian refrigerators, and there is a lot of meat of the same origin in ports and warehouses whose sanitary documentation (BSE) is uncertain.

Until these collected volumes are absorbed, it will be difficult for prices and quantities purchased to improve.

An optimistic approach to the probable evolution of the Chinese market maintains that with the passing of the months these stocks will be absorbed, the consumption in the channel of food service it will gradually recover and in the second semester, with the seasonal increase in Chinese purchases of beef –for the Lunar New Year holidays in January– prices will also recover.

“China is a new, immature market, with many inexperienced operators, who have bought a lot of extra meat; and as an Argentine butcher would say, now they are having a binge. It can be considered that the current import values ​​are at a floor, the positive fundamentals for this market are intact”, they observe in the sector.