Chinese veto locks 100 thousand tons of meat in Brazil and already affects price, says consultancy

About 100,000 tons of dammed beef are waiting for a position from China on a veto that has lasted six weeks, after the disclosure of the cases of “mad cow” in Brazil. The estimate is from the specialized consultancy Safras & Mercado.

“This has been dammed since the embargo. Usually the meat is inspected and then shipped to the ports and from there to the country of destination. But, with China discrediting Brazil, the flow was interrupted“, says consultant Fernando Iglesias.

The volume of stored meat is an informal estimate, as meatpackers do not disclose this information. However, the Brazilian Association of Refrigerators informed that Brazil exported more than 100,000 tonnes of beef to China in September, referring to contacts made before the veto.

The expectation now, according to sources heard by the report, is about the position of China in relation to the tons shipped. Even if they are from contracts prior to the discovery of the disease, there is still no confirmation that these cargoes were delivered to the Asian country, or barred from being returned.

China is Brazil’s main trading partner, and was the destination for 58% of beef shipments from January to September 2021, corresponding to US$ 3.8 billion.

CNN contacted the country’s main beef exporters. Minerva Foods said it continues with its plants in Uruguay and Argentina to replace demand from China. “We continue to meet Chinese demand through our operations in other countries, without compromising the relationship with our customers and our market share, which reinforces geographic diversification as one of our main competitive advantages,” he said in a note.

Marfrig, on the other hand, stated that “it is in a period of silence due to its quarterly disclosure of financial results and will not comment”. JBS was also contacted by CNN and said it won’t talk about it.

Domestic market prices

This scenario already makes companies look for a faster destination for the product in the domestic market. “Refrigerators have already started to report that part of the meat that is in the cold rooms has already been made available on the domestic market”, says Iglesias. The movement directly impacts the values, and the precision is that prices fall

“The wholesale meat prices are giving way, they haven’t reached the retail yet, but it’s a matter of time”, he says.

Based on a daily collection of physical market prices and also wholesale prices for live cattle and beef at the wholesale level, the consultancy estimates that prices could fall by 10% to 15%, if all this stock reaches the domestic market .

At retail, prices can drop by up to 10%. “Traditionally, retail translates downward movements more slowly and in lesser intensity”, he says.

Exterior reverberates veto duration

China’s veto of brazilian meat reverberates abroad.

Brazil voluntarily stopped exporting meat to China, its largest market, at the beginning of September, after the confirmation of two cases of the disease in two different factories. Later, however, even with the control of cases in Brazil, the Chinese interruption was maintained.

The topic was addressed by Financial Times this week. According to the newspaper, the prolonged veto is already worrying Brazilian authorities and could reduce exports by approximately US$ 4 billion per year (equivalent to R$ 21.8 billion).

Last week, the World Organization for Animal Health (WHO) concluded a report on the two cases of mad cow and pointed out that there is no risk of the disease spreading, according to Roberto Dumas, economics professor at Insper, in an interview with CNN. The overthrow of the meat ban, however, has not yet taken place.

About Abhishek Pratap

Food maven. Unapologetic travel fanatic. MCU's fan. Infuriatingly humble creator. Award-winning pop culture ninja.

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