Despite the cooling of China’s economy, which is now only growing at a rate of around 6.9% per year, beef imports in China showed no sign of following the country’s slowdown. This is according to the Global Beef Quarterly Report Q1 by the Dutch financial services company Rabobank.
The quarterly report stated that, regardless of China’s economic growth being slower than it was in 2014, beef imports in 2015 surged by 60% when compared to the previous year. Official volume figures for beef imports now stand at 473,000 tonnes (t).
Use of the word ‘official’ is important here, as the Chinese government has cracked down on the trade of meat in the grey market – a market where commodities are traded through channels that are legal but unintended by the original manufacturer.
Meat crackdown
In the past, this has meant accurate figures on beef imports in China have been difficult to ascertain as there remains a degree of ambiguity over the origin of some meat products sold in China. The crackdown on the grey market in the first half of 2015 means official figures show rising demand for beef imports in China, said Rabobank. But the rise has also been a result of an increase in speculative consumer buying.
The increase in volume imports has been largely supplied by Argentina, Brazil and New Zealand, where weaker currencies have led the countries to supply beef at more competitive prices.
Rabobank has said it expects China’s beef imports to continue to rise in 2016, despite the country’s economic slowdown. Ireland and Mongolia have just been added to the supplier list by China and negotiations with the UK and France are ongoing. This move to allow more countries to import beef into China is a diversification strategy by the government in order to lower the beef price in local markets and make it more affordable, said Rabobank.
Weakening real
Rabobank’s senior animal protein analyst Angus Gidley-Baird said he believed China would import more from South America in 2016 too, as the real continues to weaken in Argentina and its president, Mauricio Macri, makes sweeping policy changes.
Another country tipped to export more beef to China is Argentina’s geopolitical ally Brazil. “Brazil, the largest Latin American beef producer, is expected to see reduced local consumption and gains in export access, which, in combination, will lead to more exports,” said Angus Gidley-Baird. “Domestically, Brazil is in a complex situation, with high inflation and a rising unemployment rate producing what some describe as the most serious economic crisis the country has ever faced.”
The weakening of the economy in Brazil will make the international price of cattle per head more competitive, with strong global demand tipped to increase local market prices, added Gidley-Baird.