Brazil beef exporters curb China shipments as quota fills up

Brazilian beef exporters attending SIAL Shanghai this year had to approach negotiations differently. Aware that Brazil has already filled more than half of the 1.106 million-tonne quota established by China for Brazilian beef exports, companies structured sales assuming slaughtering and production would need to occur in time for shipments to arrive before the end of June. The goal is to ensure cargo reaches Chinese ports before an additional 55% tariff takes effect.

That deadline was set because industry expectations are that Brazil’s quota will be exhausted by then. On Tuesday (20), the Chinese government said Brazil had already used 55.4% of its quota, totaling 612,800 tonnes through April. Part of the cargo shipped from Brazilian ports in mid-March, April, and the first three weeks of May has not yet been accounted for. Industry estimates suggest Brazil still had around 350,000 tonnes left available within the quota.

Here’s a monthly breakdown of beef exports bound for China, according to the latest intelligence from Datamar:

Beef Exports | China | Jan 2023 – Mar 2026 | TEUs

Source: DataLiner (click here to request a demo)

In April, Brazilian meatpackers exported 138,000 tonnes to China, according to Brazil’s Ministry of Industry and Trade. The sector expects shipments in May and June to remain close to 140,000 tonnes per month. Because vessels transporting refrigerated beef containers take roughly 45 days to reach China, expectations are that Beijing will officially announce the exhaustion of Brazil’s quota by the end of July, based on imports cleared during the period.

Until recently, there had been expectations that the tariff-free volume would be exhausted earlier, with cargo shipped in May. The possibility of exporting through June gave Brazilian meatpackers some advantage in negotiations with Chinese buyers during the trade fair.

“Sales are moving forward, and the industry has acted responsibly. The sector wanted regulation to create balance, but it did not come,” said Roberto Perosa, president of the Brazilian Beef Exporters Association (ABIEC). “Everyone is operating until the second week of June without taking risks. There is no discussion about exporting and absorbing costs outside the quota.”

Some companies are still extending their shipment window until the end of June. “We will remain cautious, with production scheduled through June 13 and shipments through the 20th,” said Daniel Freire, CEO of Mercúrio, based in Pará state. He said Chinese importers are becoming “fearful and reluctant” because of the rapid use of the quota.

China accounts for 60% of Mercúrio’s revenue and receives 90% of the company’s exports. Since the start of the year, Freire has already adjusted production schedules, cutting slaughter volumes from 40,000 cattle per month to 25,000. “We will adjust production to serve the market,” he said during SIAL.

The strategy adopted by exporters at the fair was to signal to Chinese buyers that Brazil would not sell at any price or share additional costs that would further squeeze margins at a time already marked by elevated costs, a weaker dollar, and rising cattle prices in Brazil. Absorbing part of the additional 55% tariff into beef prices is viewed as unfeasible.

“We do not want to give up our pricing, and we are not going to take risks. China has been key to our business, but we are not going to share responsibility for the quota,” said Paulo Emílio Franco Prado, CEO of Plena Alimentos, also attending the fair.

The industry’s message is that Brazil will redirect sales to other markets, including Chile and the U.S., which exporters currently view as major opportunities. Exporters are still awaiting formal confirmation of tariff exemptions for U.S. shipments, but believe the current 26.4% tariff still allows viable business.

“The global cattle industry faces this challenge of limited cattle supply and meat supply, but Brazil is resilient and has built a consolidated role as a major player and key partner in combating food insecurity,” said Júlio Ramos, strategic affairs director at ABIEC.

Plena Alimentos, which operates plants in Goiás, Minas Gerais, and Tocantins states, also exports to the Middle East and has less exposure to China, which represents around 27.5% of its business.

“We already secured a strong forward sales position in other markets,” Prado said. Some contracts may be extended into July to continue supplying China throughout June, he added. “But we are sold out through August in those other markets.” Even so, the pace of slaughtering fell 7.6% last month to adapt production to the new environment.

With less pressure to close deals immediately, meatpackers gained bargaining power for higher prices, around $6,600 per tonne for six-cut beef forequarter products, the cuts most purchased by Chinese buyers. Importers attempted to push prices lower. Some also reported difficulties obtaining financing for the deals—a common practice in China—given the risk that cargo may arrive after the quota is exhausted.

“We sold through June to arrive within the quota, although there may still be one or two weeks of space left in July because everyone eased off, but we are not taking that risk. We feel customers are also concerned because the 55% tariff is unworkable at this stage,” said Fabrizzio Capuci, executive director of Naturafrig. (Clarice Couto contributed reporting, in São Paulo)

Source: Valor International

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