US - After 13 years, China is getting ready to open its doors to US beef, a welcome development given the increasingly important role that China now has in global beef trade, according to the latest Daily Livestock Report published by Steiner Consulting Group, DLR Division, Inc.
The first news regarding this move came on Wednesday when Reuters referenced statements by the Chinese premier Li Keqiang who “promised to resume Chinese beef imports of US beef soon, calling it a sign of Beijing’s sincerity to improve commercial ties with the US.”
This report was followed yesterday by another Reuters wire announcing that the Chinese Ministry of Agriculture had agreed to conditionally remove the import ban on US beef. In addition, China announced that it would also lift its ban on Canadian boneless beef from cattle under 30 months of age.
We will not speculate why Chinese officials have decided to take this decision now and what implications this has on the overall bilateral trade relations between the two countries. There are plenty of political commentators that will discuss this ad nausea going into peak election season.
We will focus on the actual implications this has on US beef trade and beef and cattle prices in this country.
Things we don’t know at this time. We do not know when the quarantine requirements will be developed and put in place.
In the past we have seen Chinese officials make such announcements but then take their time as they negotiate the new sanitary protocols. However, in the case of Brazil, Chinese officials worked quickly to resume trade.
The Chinese Premier made a similar announcement in May 2015 about allowing Brazilian beef into the country and in June Brazilian plants were shipping product into China.
Things we don’t know but expect to happen. So we do not know when trade will resume since the quarantine protocols have yet to be announced. But we can guess what some of the requirements will be in order for US beef to clear Chinese customs.
Current Chinese rules specify that beef imports need to free of hormone growth promotants (HGP). In this regard, Chinese rules are similar to those in place in the European Union, something that has limited US beef exports to that market in the past. While the supply of hormone free cattle in the US has been increasing in recent years, it still remains a relatively small percentage of the total cattle herd.
Unfortunately, no statistics (that we know) exist to tell us what the actual supply of these cattle really is.
We also think that Chinese officials will insist that beef going into the Chinese market be from cattle that are not fed ractopamine. This has been the case with pork and we have no reason to think it will not be the case with beef.
Market impacts. In the short term, we think the market impact from resumption of trade with China will likely be limited due to the limited supply of beef that will be eligible for shipment there.
Brazil was allowed to ship beef to China last year and during the last 12 months has shipped almost 166,000 MT of beef to that country, becoming its largest supplier. At this point is appears unlikely we will be able to come anywhere close to shipping those kinds of volumes into China.
Still, resumption of trade is important as it does offer packers the ability to add some more value to the hormone free cattle that are currently available. But don’t expect this to be a game changer.
Going forward, access to the Chinese market still is critical. The combined Chinese/Hong Kong market is expected to emerge as the largest global beef buyer by 2017, eclipsing the US and far bigger than Japan.
TheCattleSite News Desk