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CME: China's Role in Global Beef Market Increasing

18 April 2017

US - Last week the USDA Foreign Agricultural Service released its semi-annual review of global livestock and poultry markets. For all those interested in global trade flows and the outlook for US trade in 2017, we think you will find this 18 page report valuable, reports Steiner Consulting Group, DLR Division, Inc.

Below are some of our observations as we look through the USDA analysis:

China has emerged in recent years as the top beef market in the world. Beef consumption in China has been increasing rapidly, albeit from a very small base. Higher incomes, a more urban population and increasing popularity of western diets has led to increased demand for beef in this market with +1.3 billion people.

As recently as 2011, imports of beef in China and Hong Kong were 180,000 MT (cwe), with Mainland China accounting for just 28,000 MT. In 2017, USDA estimates combined beef imports for China/Hong Kong at 1.425 million MT (cwe), a 7 fold increase from just six years ago.

Given the increased importance of China in the global beef market, there has been a lot of interest in efforts to open this market to US beef products and it appears that Chinese officials have agreed in principle to do that. However, there are a number of obstacles that will limit the amount of US beef that will go into Chinese markets in the short to medium term.

China insists that all beef going into the country conform to its traceability requirements. Australia, Brazil, Uruguay, New Zealand and Argentina have mandatory traceability systems for their cattle but at this point this is not the case for the US. Also, China has a very strict policy with regard to hormones.

A Chinese notice to trade said that “any detection of a synthetic hormone, or a detection of a naturally occurring hormone at levels higher that the normal physiological levels, will result in rejection of the consignment and possible delistment of the plant.”

Product is tested at the port of entry and exporters run significant financial risk, which will likely limit the amount of beef that US can ship into China even as US beef is allowed into the country. But other markets hold more promise for US beef.

Exports to Japan and S. Korea likely will benefit from increased competitiveness of US beef product relative to Australia, our key competitor in these markets. Exports to Mexico and Canada also are expected to be quite robust.

The challenge for US beef going forward will be to gain increased access to regions and parts of the world where beef consumption is expected to increase as incomes grow and consumers look to upgrade their diets.

You can view the USDA Foreign Agricultural Service's semi-annual review of global livestock and poultry markets by clicking here.

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