China’s effort to fill a protein gap created by the spread of African swine fever is rippling through Brazil’s massive beef industry, pushing up prices and profits for both cattle ranchers and meatpackers.
While China has been increasing local poultry production and raising pork imports from several suppliers, Brazil is the only big beef exporter able to meet China’s demand. That’s leading Chinese importers to buy all types of cuts, raising prices along the Brazilian chain, from calves to animals ready for slaughter.
Brazilian beef shipments to China jumped 62% last month from a year ago as China approves more plants to export. Both wholesale beef and cattle prices jumped about 30% this month, according to figures from Cepea, the University of Sao Paulo research arm.
“The export increase to China is stunning,” said Cesar de Castro Alves, an agriculture consultant at Itau BBA bank. “Brazil is dominating China’s beef market.”
The windfall for Brazilian beef suppliers is cold comfort for domestic consumers who are paying record high meat prices. “Brazilians don’t have income enough to support the current price level,” Alves said at an Itau BBA event in Sao Paulo Thursday.
He warned ranchers about expanding too aggressively given how expensive it is to buy calves that take as long as three years to mature. Chinese demand for Brazilian beef may wane when the Asian nation resolves its protein shortfall or when it finally reaches a trade deal with the U.S., he said./Investing.com