MercoPress • China buying all Brazilian beef avaliable; meat prices in Sao Paulo at record high

Chinese demand is increasingly swallowing up Brazil’s beef supply, pushing the country’s cattle prices to a record high. China’s hunger for foreign meat has shot up as an outbreak of African swine fever has reduced its domestic pig population and has sent it looking for substitutes.

Chinese imports of Brazilian meat are up 23.6% for January to October against the same period in 2018, meatpackers association Abrafrigo says.

Wholesale beef prices in the greater Sao Paulo area have consequently hit an all-time high of 13.9 Reais per kilogram this week, according to University of Sao Paulo’s Cepea research centre, a benchmark think-tank.

That is feeding through and having an effect on consumer prices. Beef prices have risen 36.4% in 2019 in Sao Paulo, the biggest consumer market, to 14.69 reais per kilogram on Wednesday.

“Meat prices will continue to rise and this will pose a challenge for the housewife,” said Andre Braz, an economist with the Getulio Vargas Foundation, a Brazilian university. “When beef rises, other meats also rise … it’s a question of substitution,” he said.

The price hike comes as Brazilians are set to receive their “13th salary” ahead of the Christmas holiday that is expected to push up domestic demand for meat in spite of high prices, further tightening the market.

“How can you tell someone not to celebrate the end of the year?,” Braz said.

China has sought to import more meat from Brazil, licensing 24 additional beef plants for export since the start of the year. Only 16 were permitted to do so at the start of 2019.

Total Brazilian beef exports in January to October were 1.5- million tons, 11% higher than in 2018, and those to China were 23.6% higher at 320,000 tons in the same period.

Braz said the market cannot sustain such high meat prices forever, and predicts that meat prices will start to drop in February or March, provided there are normal weather conditions for grazing pastures and the cattle supply is seasonally higher.

In related news, Marcos Trojo, foreign trade secretary at the Economy ministry said that two-way trade between Brazil and China this year is expected to reach US$105 billion to US$110 billion. Last year, two-way trade between the countries totaled US$98.7 billion, according to Brazilian government statistics.