China expands purchases of beef from Brazil

Driven by Asian consumption, mainly from China, Brazilian beef exports hit a record at the beginning of the year. The results project a 2022 favorable to ranchers and meatpackers.

Experts say that not even the impacts already caused by the war in Ukraine should significantly harm Brazilian shipments.

In February alone, 182,341 tons of beef were exported (in natura and processed), according to Abrafrigo (Brazilian Association of Refrigerators). The result is a record for the month, and revenue reached US$ 975.8 million.

China has not purchased from Brazil since September 4, in an embargo of more than 90 days motivated by two atypical cases of the BSE disease (bovine spongiform encephalopathy), known as “mad cow”.

The return to the market took place months after the scientific confirmation by the OIE (International Organization for Animal Health) that the cases did not cause damage to the herd, as they were spontaneously generated and not contaminated.

Data from the association of refrigerators show that, in February alone, there was a 47% increase in volume and 77% in revenue compared to the same month last year. There was also a cycle of expansion in the previous month, including in the average price of meats.

342,300 tonnes were exported in the first two months of this year, with revenues reaching US$ 1.78 billion, according to Abrafrigo, based on data from Secex (Secretariat of Foreign Trade).

The average price of meat rose 20% in dollars compared to the beginning of last year.

China bought 140,900 tonnes in the first two months of the year, or 41% of the total. Although it has seen its share decline — it was 47% in 2021 — the total exceeds shipments in the same period last year, when the country imported 119,000 tonnes.

The US is the second largest market this year, with 43,500 tonnes, or 12.7% of the total, followed by Egypt, with 31,700 tonnes (9.3%), and Hong Kong.

The percentage reduction in China, despite buying more, means that Brazilian exporters were able to expand sales to other destinations, including Russia. In total, there was an increase in shipments to 88 countries, while another 36 bought less.

“Theoretically, cattle were less impacted in this mess, because basically all our production is on pasture. and Ukraine are relevant in corn and wheat, and the scenario has become much more complicated,” said César Castro, agribusiness specialist at Itaú BBA.

With uncertainty hovering around wheat and corn, the risk to meat ends up being indirect, says Castro. There will be higher prices at some point, which will put even more pressure on the consumer. “Ox, whatever we have, we end up exporting to China.”

Other markets that appear at the top of the ranking are Hong Kong, Israel, Chile, Philippines, United Arab Emirates, Italy and Russia.

“Even with the drop in the outlook for global economic growth [por conta da guerra]the year for meat exports will be good,” said Marcos Fava Neves, a professor at USP (University of São Paulo) specializing in agribusiness.

According to him, the impacts of the war could make the world economy grow by 0.8% to 1% less, which would mean an increase of around 4% in the year.

“This represents good opportunities for meat, especially beef and predominantly in Asia, which has been breaking records for imports. It is to be hoped that there will be no problem, health embargo. If not, it must be very good,” said Neves.

Castro stated that the strong volume exported, however, has its consequences for the meatpackers that do not sell abroad, since they are unable to price the meat on the domestic market.