Brazil's Minister of Agriculture, Tereza Cristina, denied that diplomatic relations with China are strained and said that she does not see the continuation of the Chinese ban on Brazilian beef, which has lasted for nearly two months, as a political act.
Technical conversations with Chinese officials continue and the exchange of information necessary for the reopening of the market which is in its final phase said Minister Cristina.
In an interview with foreign media, the minister pointed out that no Brazilian beef has entered China yet. Earlier this week information circulated that beef cargo had been released in the port of Shanghai. Allegedly it was only a request for the necessary documentation for the entry of the product into Chinese territory.
“We have containers arriving in China, but none have been released yet,”Tereza Cristina underlined. However she did not stipulate with a deadline for the reopening of exports and also rejected the possibility that the embargo is in retaliation for criticisms against China made by President Jair Bolsonaro.
Anyhow, conversations have not yet evolved into an outcome and we are hoping reopening will take place in the very short term..We are advancing… we are now in the final phase of providing the information Chinese officials were requesting,” added Tereza Cristina.
Nevertheless the “China factor” remains decisive for Brazilian livestock prospects in 2022. With the domestic market weakened by the economic contraction and exports of almost 16% of beef production held back because of the Chinese suspension, the scenario is further complicated by rising costs and disincentives to investments, according to cattle industry experts.
University of Sao Paulo researcher, Thiago Bernardino de Carvalho, the trend is for costs to continue to rise in the first half of 2022 – the prices of medicines and nutrition should rise some 5%, along the whole twelve months”
At an event organized by the Confederation of Agriculture and Livestock of Brazil (CNA), the researcher said it is necessary to look at the farm as a company that can face a “scenario of uncertainties” if there is good cost management and sales of cattle. “The China factor and its impact on market prices was encouraging the cattle breeder. If China returns and the market settles, there will be investments”.
Consulting firm Agrifatto, CEO Lygia Pimentel, anticipates a reduction in profit margins for ranchers. Since 2017, the sector no longer lives “normal years”, she said, and China’s pullback increased the volatility of the grain market for livestock.
“It’s a challenging market. China’s absence will hurt, as we are subject to the international market and the domestic market is depressed because of the economic contraction,” she added.