by: Jessica Ferreira
China’s beef imports are falling for the first time since 2016, with prices dropping to the lowest level in almost three years, amid a slowdown in consumption and ample domestic supply, dealing a blow to its biggest supplier, Brazil.
Although China was the destination for more than 52% of the South American country’s beef sales last year, even after suspending imports for around two months due to a case of mad cow disease, import volumes are expected to fall by 4% this year, ending 12 consecutive years of growth, according to the US Department of Agriculture.
Although the country’s meatpackers have sought to diversify their exports, the alternatives remain limited, as “Brazil depends a lot on China – if there is a setback in China, it will affect Brazil a lot,” said XP Investimentos analyst Leonardo Alencar, highlighting the risks of depending too much on a single client.
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Massive exposure to China has hurt meatpackers’ profits, as Minerva SA, South America’s largest beef supplier, saw export revenues fall by almost 18% in 2023 and Marfrig Global Foods SA’s South American beef business saw a decline of almost 26%.
China’s share of the global meat trade has fallen since its peak in 2020, following an increase in domestic meat supply, and is expected to produce 7.7 million metric tons this year, an increase of 1 million tons compared to 2020, according to the USDA.
However, most analysts predict that China’s setback will be temporary and that the Asian country will continue to be an important engine of growth for Brazil’s beef exporters, since capital consumption levels are still below the global average.
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China may even become more relevant in the coming years, after it cleared 24 additional Brazilian beef plants for export last month, which could lead to an increase in beef imports of up to 60% in the coming years.
Although Brazil is looking for new customers in an effort to diversify, as the government has recently opened up new markets for beef in Mexico and Singapore, the potential for expansion is still insignificant when compared to China’s massive market.
