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This is China, which represents 70% of total exports.

Shipments to slaughter (DTE, Senasa) for the month of June 2023 ttotaled 1.31 million heads, 12% more than in June last year, resulting in the second highest record in the last twenty years for this month.

Regarding the slaughter of cows, some 309 thousand animals, it was 17% higher in June than last year and the second highest in the last two decades, only surpassed by the 365 thousand cows slaughtered in June 2009, in the worst of the liquidation.

Cow slaughter began this year at a rate of about 10,000 animals per day, a record that rose throughout the first semester to reach 15,461 cows per day last June.

The slaughter of steers draws attention, which in May –with 336,000 animals– is 6% above June 2022. The daily slaughter of this category began the current year with 13,400 heads, and rose to reach the annual maximum last June with 16,800 steers per day. It is striking that in such a bad context for rearing and wintering, the supply of steers this year remains so high.

Chinese demand

While some operators think that we are close to a floor, the values ​​that China pays for beef continue to fall. The cow in 5 cuts, a very representative merchandise of the trade with the Asian giant, was worth US$ 6,200 in March 2022, to fall to US$ 5,300 in July and US$ 4,000 in December. In recent days, the 5-cut cow is trading at around US$3,800, 38% below fifteen months ago.

Argentina continues to export high volumes of beef to China: 54,000 tons were shipped in March (including bone with meat), 23% more than the same month last year.

The Chinese market is still very difficult: Brazil continues to dump huge volumes to this destination, and in recent days some 70,000 tons of Brazilian meat detained in ports and warehouses have finally been released, due to the recent problem of the BSE case.

From mid 2022 Chinese importers have been buying large volumess of meat paying prices much higher than the current ones and today they try to compensate the resulting losses by lowering the value they pay for the cuts.

The accumulated stock of meat in the chamber is very high –it would be in the order of 600,000 to a million tons–, so it would take several months for this depressed consumption –especially in the foodservice channel– to absorb the enormous stock of meat accumulated in the hands of importers, distributors and processors. The Chinese government does not publish beef stock data, and food stock data is generally considered strategic information in this country.

ACCUMULATED STOCKS

Simon Quilty, an independent analyst of Australian origin, argues in a recent article that the phenomenon of accumulated stocks of imported meat involves all of Asia –the most dynamic destination for international demand–, with high meat inventories in Japan, South Korea and Chinese. In recent months, large volumes have been imported into all these countries and this coincided with a general drop in economic activity and meat consumption, with very cautious consumers, shifting demand towards cheaper proteins, such as chicken, pork, or the “pool fish”.

Some operators that we have consulted these days think that we would be close to the price floor, and that in August-November there would be a (partial) recovery of values ​​and volumes. This would be due to the seasonal increase in Chinese demand for beef, intended to cover the increased demand for meat that originates from the Lunar New Year celebrations, which fall on February 1 next year.

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2023-07-16 12:04:48
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