Meat: China buys again and exports should react – 03/23/2023 – Shuttle

China has returned to the Brazilian beef market. The announcement was made by the Minister of Agriculture, Carlos Fávaro. The interruption of Brazilian exports to China had been a decision by the Brazilian government itself, following an agreement signed in 2015 with the Asian country.

This agreement provides that, in case of suspected mad cow in the country, both in classic and atypical cases, Brazilian exports to the Chinese are immediately suspended. The resumption only occurs by a decision by China. That’s what just happened.

After 28 days of waiting, the market will be able to export to the Chinese again, a much shorter time than the 103 days of the previous occurrence, in September 2021.

This is the sixth atypical case of mad cow in the country. The first took place in 2010, in Sertanópolis (PR). In 2014, 2019 and 2021 cases occurred in Mato Grosso. Also in 2021, there was a case in Minas Gerais and, the most recent, in Pará.

The interruption of exports to China increasingly puts Brazilian production at risk. On average, sales to the Asian country correspond to 520,000 animals per month, with revenues of US$ 676 million, according to calculations by the consultancy Agrifatto, specialized in the sector.

These interruptions interfere with internal cattle prices, revenues and generate the need to search for new markets, when prolonged. In 2019, when the interruption lasted only ten days, live cattle prices fell by 6.2%.

In that period, Brazil’s dependence on the Chinese market in exports was 21%. Now it is 62%. The Chinese represented 5% of Brazilian production, a figure that rose to 20%, according to Agrifatto analysts.

The Brazilian market was already showing the effects of this most recent interruption in sales to China. Exports in the second week of this month were 46% lower than in the first.

Due to this interruption, which took place on February 23, the consultancy estimates a decline in total Brazilian exports this month to 150 thousand tons, 11.5% below the volume of the same month in 2022.

Livestock prices have dropped 8% in São Paulo since the market became aware of this case in Marabá (PA). In 2021, since the beginning of the interruption of exports to China, in September, to the return of Asians to the Brazilian market, in December, the arroba of the ox had a retraction of 17% in domestic prices.

The impact of the current interruption on production cannot yet be measured, according to Agrifatto’s assessment. Slaughterhouses took collective vacations, interspersed slaughter and took other measures to reduce buying pressure.

For the consultancy analysts, however, there is a clear interdependence between Brazil and China since 2020. Brazilian production depends on the Chinese, and imports from China depend on Brazil. In September last year, the Chinese were left with 137 thousand tons of meat “in natura” of the 203 thousand exported by Brazilians in the month.

Mad cow disease (Bovine Spongiform Encephalopathy) affects the central nervous system of animals, causing degenerative lesions. The six cases that occurred in Brazil were all atypical and non-transmissible. They usually occur in animals older than eight years.

The classic cases of the disease are transmissible and occur by ingestion of by-products of animal origin. Brazil has never recorded a classic case of the disease.

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