Chinese veto blocks shipment of estimated 100,000 tons of meat in Brazil; domestic prices fall
RIO DE JANEIRO, BRAZIL – About 100,000 tons of reserved meat are waiting for a veto opinion from China, which came just six weeks after isolated cases of “mad cow disease” became known in Brazil. The estimate comes from the specialized consulting firm Safras & Mercado.
The Brazilian Association of Meat Processing Companies said Brazil exported more than 100,000 tons of beef to China in September, citing contacts before the veto.
Therefore, it can be assumed that more or less the same amount of meat was prepared for shipment to China in October and is now stuck in cold storage.
China is Brazil’s leading trading partner and was the destination of 58% of beef shipments from January to September 2021, equivalent to US$3.8 billion.
PRICES IN THE BRAZILIAN MARKET
This scenario is already prompting companies to look to the domestic market for a faster destination for their product. “Cold stores are reporting that some of the meat in cold storage is already being offered to the domestic market,” Fernando Iglesias, an analyst at Safras & Mercado, says to CNN Brasil. The movement is having a direct impact on prices, which are falling.
Wholesale meat prices are softening, they haven’t reached retail yet, but it’s only a matter of time.
Based on a daily survey of physical market prices and wholesale prices for fat cattle and wholesale beef, the consulting firm estimates that prices could drop 10% to 15% when all of those stocks hit the domestic market.
Retail prices could drop as much as 10%. “Traditionally, the retail market reacts more slowly and with less intensity to falling prices,” he says.
Brazil voluntarily suspended meat exports to China, its largest market, in early September after two cases of the disease were confirmed at two different factories. Later, however, when the cases in Brazil were under control, the Chinese interruption was maintained.
Last week, the World Organization for Animal Health (OMSA) completed a report on the two cases of mad cow disease, indicating that there is no risk of the disease spreading, according to Roberto Dumas, professor of economics at Insper, in an interview with CNN. However, the overcoming of the meat veto has not yet occurred.
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