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Montevideo, February 28th 2024 - 11:58 UTC

 

 

Brazilian beef industry adopting to lower prices for Chinese demand

Wednesday, July 12th 2023 - 22:16 UTC
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The price of one metric ton of beef dropped from over US$7,000 in the middle of last year to approximately US$5,000 last month, according to Figuereido analyst The price of one metric ton of beef dropped from over US$7,000 in the middle of last year to approximately US$5,000 last month, according to Figuereido analyst

Beef consumption in China is lower than what Brazilian exporters had anticipated for the post-pandemic period, according to a report by Datagro. Data compiled by the consultancy from China’s Ministry of Agriculture and Rural Affairs reveals that beef prices have fallen below 72 yuan for every kilo (approximately R$ 49, almost US$ 10) bought from Brazil in recent days, down from 78 yuan (R$ 53) at the beginning of this year.

João Otávio Figueiredo, a research leader at Datagro Pecuária, states that Chinese demand typically rises in the second half of the year, with around 60% of the total volume imported during this period. Importers begin accumulating stocks in preparation for the Lunar New Year, the most important holiday in the country.

“However, the volume does not necessarily translate to better prices. Just consider the case of Argentina, which performed well during the Brazilian embargo but did not witness an improvement in prices,” explains the Datagro analyst. Additionally, the appreciation of the Brazilian real against the dollar has made Brazilian products more expensive in the international market.

The price of one metric ton of beef dropped from over US$7,000 in the middle of last year to approximately US$5,000 last month. Figueiredo further notes, “There are even Chinese buyers looking to negotiate at US$4,500. The industry will have to pass on this price drop to export cattle.”

Figueiredo expects the arroba do boi (a Brazilian unit of weight for live cattle) to reach R$270 in October. However, in a worst-case scenario, it could drop to around BRL 250 per arroba, representing a decline of BRL 100 compared to 2022 levels.

Categories: Agriculture, Brazil.

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