The Impact of China’s 35% Price Reduction on Argentine Meat Exports

The price paid by China fell by 35% and condemned local companies to a sharp drop in turnover. EFE

2023 is not being a good year for Argentine exports. The trade balance is clearly negative and there are no expectations that the trend will reverse in the remainder of the year. The result was predictable, due to the strong impact of the drought that marked last season, but it is striking that even in items with good numbers in quantities, the billing values ​​are in the red.

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The best example is beef. According to data published by the Chamber of Industry and Commerce of Meat and Derivatives of the Argentine Republic (Ciccra), between January and August of this year, Argentine beef exports totaled 453,900 tons of product weight (tn pp), which were equivalent to 651,000 tons of bone-in beef (tn r/c/h

In this way, growth of 8.5% and 9.4% were recorded, respectively, in relation to the January-August 2022 period. Put in absolute terms, the increases were equivalent to 35,600 tn pp and 55.7 thousand tn r /c/h.

The volume exported this year not only exceeds 2022 shipments, but is also higher than what the sector achieved in the previous 18 years. According to Ciccra data, from 2005 (beginning of the statistical series) until now, at no time was such a high volume of exports reached in the accumulated of the first eight months.

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However, in terms of billing the situation is very different. According to the study, in the first eight months of the year the total collected by meat exporters was equivalent to USD 1,936.4 million, which meant a decrease of 21.1% year-on-year (- USD518.6 million). According to the Chamber’s analysis, this was explained exclusively by the decline in the price paid in the main export destinations (-27.3% year-on-year).

When talking about prices, we cannot ignore what is happening in China, the main destination for Argentine meat (that country buys almost 8 out of every 10 kilos of exported beef). That country, the main client of the Argentine meat industry, was precisely the one that adjusted the average price paid the most (-35% annually).

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The low prices paid by the Asian country in the first eight months of the year were partly offset by higher prices in other markets, but the volume sent to China is so high that even so the overall numbers were clearly negative.

To analyze the evolution of prices, it must first be considered that 85.3% of the total exported in the January-August period corresponded to frozen cuts and 14.3% to fresh boneless cuts. Now, in general terms, the value paid per ton of product weight decreased from USD 5,868 to USD 4,266.

This means that, considering the total number of markets that Argentina accessed, the average value decreased by 28.32%, which clearly explains why billing plummeted in the first eight months of the year, despite reaching a volume export record for the period.

Exports to China – the main destination for Argentine meat – totaled 353,200 tn pp in January-August 2023 and represented 77.8% of the total exported. In year-on-year terms they were 9.7% higher (+31,200 tn pp), but the average price fell 35% annually, reaching USD 3,241 per tn pp. In this way, revenues totaled 1,144.5 million dollars (59.1% of the total) and were 28.7% lower in the year-on-year comparison.

Israel, the second most important market for beef, purchased 19.7% more than in January-August 2022, totaling 28.4 thousand tons of Argentine beef (6.3% of the total). The average price decreased 18.2% annually and income did the same by 2%, totaling 174.0 million dollars (9% of the total).

With data as of January-August 2023, the United States became the most dynamic destination of the main 9 buyers of Argentine beef and the third most important. Exports to the US totaled 12.46 thousand tons of beef, that is, 23.7% more than in January-August 2022 (3.6% of the total). For its part, the average price showed a decline of 17.1% annually, remaining at $5,525 per ton pp. But in this case, billing was equivalent to 89.2 million dollars and showed an increase of 2.5% year-on-year (4.6% of the total).

2023-10-21 17:44:00
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