China Approves Sanitary Protocol for Colombian Beef Exports; Brazil's Animal Protein Sector Performance in Decline
Key Highlights :
Brazilian meatpacker Minerva announced on Monday that it had received a notification from Colombia’s government, stating that China had approved a sanitary protocol in order to open its market for Colombian beef exports. This news was welcomed by Minerva, which owns two plants in Colombia, as it will help expand their exposure to the Chinese market and maximize their arbitrage capacity. However, despite the positive news, Brazil’s strong performance in beef and chicken exports this year is highly conditioned by the decline in these product prices in the international market, which is becoming an increasing point of concern for the animal protein sector.
According to the protein analyst at Safras & Mercado, Fernando Iglesias, the average prices of chicken are in line with those recorded in 2022, but the trend is for further devaluations in the coming months. The same scenario is observed in the beef sector, with prices paid by Chinese importers falling from US$ 7,500 per ton last year to US$ 4,500 per ton this year. Iglesias said that if prices are falling, export revenues are also lower, which is one of the reasons why the price of cattle has fallen so much.
In August, the average price paid for Brazilian chicken meat was US$ 1,872.80 per ton, a 12.24% decrease compared to the same period in 2022 and a 6.3% decrease compared to July. In total, Brazil exported 3.4 million tons of chicken meat from January to August, with revenue of over US$ 6.7 billion. Safras & Mercado’s forecast is that this volume will reach 5 million tons this year, equivalent to one-third of global trade.
The market is expected to recover as a result of Chinese government stimulus measures, including further currency depreciation. “Economic recovery in China is crucial for the formation of beef prices in the international market and, consequently, for cattle,” Iglesias said. The Safras & Mercado consultancy predicts that Brazilian beef exports will amount to 3.3 million tons in 2023, a 1.49% decrease compared to last year.
In conclusion, the news of China's approval of a sanitary protocol for Colombian beef exports is a positive development for Brazilian meatpacker Minerva, but Brazil's strong performance in beef and chicken exports this year is highly conditioned by the decline in these product prices in the international market. The market is expected to recover as a result of Chinese government stimulus measures, including further currency depreciation. Safras & Mercado’s forecast is that this volume will reach 5 million tons this year, with Brazilian beef exports amounting to 3.3 million tons in 2023.
