The substantial growth in US beef exports to China this year could be the start of a new long-term trend rather than just a flash in the pan, according to a Rabobank report.
Sales of US beef to China increased more than 1,000% in volume and value ($ 622.5 million) in the first half of the year. And the market shows no signs of slowing down, according to Don Close, senior vice president of RaboResearch and Animal Protein.
“It was an amazing story,” Close FarmWeek said. “If you look at the strength in cattle and beef prices globally, everything indicates how much the demand for beef in China is driving the market. “
How has beef consumption become so much more popular in China, the world’s largest producer and consumer of pork? Close believes that several factors came together to improve the change.
“What drives him is first ASF (African Swine Plague). This has pushed pork and pork prices to levels that have narrowed the price differential in China between beef and pork and spurred many more (beef) sales, ”Close said. “And then with COVID, people learned to start cooking (beef) at home, and that’s where consumption really increased. Traditionally, beef consumption in China has been done away from home. “
Improved market access under the Phase 1 Economic and Trade Agreement has also helped position the United States as a larger player in the Chinese beef market. And, the Rabobank report predicts that strong beef sales in China will continue.
“Given the circumstances of changing dietary habits and changing taste preferences in China, and their inability to significantly increase their own production of cattle and beef, (the Chinese) will be a major player in China’s imports. side of the beef for a while, ”Close said.
Overall, US beef exports increased 18% in the first half of the year, compared to the same period last year, to a record $ 4.64 billion.
Sales of U.S. beef to the two main markets, Japan and South Korea, also increased while sales to Mexico, a critical destination for touring and other underutilized cuts, increased 15% in volume over the past decade. first half of the year, reported the American Federation of Meat Exports.
Exports were equivalent to about $ 351 per feeder slaughter head in June and may contribute to better pricing opportunities for livestock.
“There is no doubt that there has been enormous frustration in the internal market. It all has to do with leverage, ”Close said. “The available supply of ready-to-market cattle has exceeded our slaughter capacity and the leverage has shifted considerably in favor of the packer. If you take the July cattle on the feed and inventory reports, we finally solved the huge backlog of cattle and we had three months of lower placements, ”he continued. “As we move into the third and fourth quarters, the supply of available livestock will contract noticeably,” which should support livestock prices.
Rabobank’s report on the beef market in China also found that the Chinese generally view cattle as a “sustainable superstar,” Close said.
“They place the cattle with small producers to increase their income,” he added. “And they pay them to feed a lot of fodder and rubbish from the fields they traditionally burned.”
This story was released as part of a cooperative project between the Illinois Farm Bureau and the Illinois Press Association. For more information on food and farming, visit FarmWeekNow.com.