China's Beef Import Volume in 2023 Expected to Decline Amid Higher Domestic Production and Strong Global Prices
•Brazil is China’s largest beef supplier, and Brazilian beef exports might not suffer much as most of them are not destined for the expected worst-hit sector, the HRI.
•Brazilian beef exports reached a fresh high in August, as expected, driven by exports to China.
According to the US Department of Agriculture (USDA), China’s beef imports are expected to fall to 2.5 million mt from 2022’s 3.1 million mt in 2023 as a result of globally high but lower domestic prices and overall weaker consumer purchasing power. The latter will have the greater impact, as beef imports are mostly consumed in the hotels, restaurants and institutions (HRI) sector, more vulnerable to weak consumer economics. The USDA also expects a decline of 3% YoY in consumption, estimated to be 9.9 million mt, and a rise of 4% YoY in domestic production, expected to be 7.4 million mt.
Overall beef consumption is expected to decline mostly on the back of a weaker economy and less imports. Meanwhile, beef production is expected to be higher due to increased cattle slaughter. Cattle slaughter is expected to recover by the second half of 2022 as COVID lockdowns and travel restrictions had hampered slaughter in the first half of the year. The increased production is expected to pressure prices down.
According to the USDA, from January to July 2022, China’s beef imports came from Brazil (38%), Argentina (18%), Uruguay (15%), New Zealand (7%), Australia (7%), and the US (7%). The rest came from other origins.
As most of Brazil’s beef exports consist of meat set to be processed further, the decline in imports is not expected to affect Brazilian exports much. However, this is not the case for the other major exporters, of which exports consist more of high-quality cuts destined for the HRI sector.
Brazil beef exports reach a new record high, driven by Chinese demand. According to Brazil’s meat processors’ association (ABRAFRIGO), total Brazilian beef exports (including offal and some processed products) in August were 230 mt, worth $1.36 billion, which represents a fresh record high. Brazilian beef products to China from January to August 2022 stood at 787 thousand mt, which represents a YoY increase of 31%. China is Brazil’s largest beef export market, comprising 52% of total exported volume during the period. Meanwhile, in terms of value, exports to China stood at $5.32 billion, representing an increase of 70% YoY. The average export price from Brazil to China during January-August 2022 was $5.07/kg. The Chinese market represents 60% of total Brazilian export value. China is followed by the US and Egypt in terms of export share.
Brazil beef (only fresh or chilled and frozen beef, not offal nor products) export price declines MoM for second consecutive month. The average export price of Brazilian beef (exc. Offal and processed products), declined in monthly terms for the second consecutive month, standing at $6.13/kg. The decline in export price reflects lower domestic consumption, which has been driven down by inflationary pressure on consumers, creating a substitution effect favorable to other cheaper meats. Considerable lower demand from China in the upcoming year -as per USDA estimates- would bring further downward pressure for beef prices worldwide.
Source: Tridge and Brazil Ministry of Economy