Brazil’s largest meatpackers JBS SA and BRF SA said that the coronavirus outbreak could help boost Chinese demand for their products, as it fans concerns about domestic food safety in China. However some also believe sales could be held back by aggressive demands for discounts from Chinese buyers.
BRF Chief Executive Officer Lorival Luz said on the sidelines of a conference in Sao Paulo that the epidemic could boost sales of foreign frozen and processed meat products in China “for food security reasons.”
“Remember the virus supposedly started at a market in China where live animals were sold,” Luz said. “All BRF frozen and processed meat products go through food security checks in Brazil before being exported globally.”
China’s newly identified coronavirus has killed at least 210 people and spread to some twenty other countries, rattling global markets and prompting evacuations.
The virus is believed to have originated late last year in a food market in the Chinese city of Wuhan that was selling illegal wildlife.
JBS Chief Executive Officer Gilberto Tomazoni said at the Sao Paulo conference that during China’s SARS outbreak in the 2000s, China imported more meat.
China’s imports of Brazilian meat have already jumped recently after African swine fever decimated the domestic pig population.
Tomazoni said he expects the impacts of swine fever on the global meat market to peak in 2020.
JBS and Hong Kong’s WH Group signed a deal this week to provide the Chinese market with up to 3 billion reais (US$ 717 million) of fresh beef, poultry and pork per year. WH Group products are sold through some 60,000 locations in China.
But a recent push by Chinese buyers to negotiate lower prices for Brazilian beef could complicate near-term sales, and lower Brazilian meat export profits over the short term.
In mid-December, Chinese importers started to ask for aggressive discounts as Brazilian beef prices soared, an executive at one of Brazil’s biggest beef exporters revealed. The same happened with beef shipments from neighboring Uruguay.
These renegotiations could dampen sales to China in the next few weeks, after some companies agreed to cut prices by US$ 1,000 to US$ 2,500 per ton, the executive said.
Tomazoni said he had heard talk about Chinese importers seeking to negotiate lower meat prices, but did not confirm whether JBS was holding such negotiations. He said JBS plans to build long-term relationships in China to stabilize prices.
“In long-term commercial relationships, there are gains and losses to be had,” Tomazoni said.