![boi](https://www.datamarnews.com/wp-content/uploads/2023/05/boi.png)
Chinese demand puts pressure on beef prices in Brazil
Jul, 10, 2023 Posted by Gabriel MalheirosWeek 202328
Beef consumption in China is lower than what Brazilian exporters had anticipated for the post-pandemic period, according to a report by Datagro. Data compiled by the consultancy from China’s Ministry of Agriculture and Rural Affairs reveals that beef prices have fallen below 72 yuan for every kilo (approximately R$ 49) bought from Brazil in recent days, down from 78 yuan (R$ 53) at the beginning of this year.
João Otávio Figueiredo, a research leader at Datagro Pecuária, states that Chinese demand typically rises in the second half of the year, with around 60% of the total volume imported during this period. Importers begin accumulating stocks in preparation for the Lunar New Year, the most important holiday in the country.
“However, the volume does not necessarily translate to better prices. Just consider the case of Argentina, which performed well during the Brazilian embargo but did not witness an improvement in prices,” explains the Datagro analyst. Additionally, the appreciation of the Brazilian real against the dollar has made Brazilian products more expensive in the international market.
The price of one metric ton of beef dropped from over US$7,000 in the middle of last year to approximately US$5,000 last month. Figueiredo further notes, “There are even Chinese buyers looking to negotiate at US$4,500. The industry will have to pass on this price drop to export cattle.”
The chart below displays Brazil’s exports of beef to China measured in tonnes in the period between January 2019 and May 2023. The data is from DataLiner
Beef exports to China | Jan 2019 – May 2023 | WTMT
Source: DataLiner (click here to request a demo)
In the best-case scenario, Figueiredo expects the arroba do boi (a Brazilian unit of weight for cattle) to reach R$270 in October. However, in a worst-case scenario, it could drop to around BRL 250 per arroba, representing a decline of BRL 100 compared to 2022 levels.
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