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USDA GAIN: Livestock and Products


05 March 2012

USDA GAIN: China Livestock and Products Semi-annualUSDA GAIN: China Livestock and Products Semi-annual

The Office of Agricultural Affairs in Beijing (OAA/Beijing) revised the 2012 forecast for China’s beef production upward by 24,000 metric tons (MT), carcass weight equivalent (CWE), to 5.5 million metric tons (MMT). The increase reflects fewer than expected outbreaks of foot and mouth disease (FMD), as well as higher slaughter weights, which were driven by improved feed quality. Cattle exports are expected to increase 13 percent to 33,000 head, largely due to growing demand from slaughter facilities in Hong Kong and Macau.

USDA GAIN: Livestock and Products

Cattle/Beef

Cattle/Beef Production:

The revised 2012 forecast for China’s beef production is 5.5 million metric tons (MMT), carcass weight equivalent (CWE), an increase of 24,000 MT from the initial estimate. The increase is largely attributable to the following factors:

  1. Fewer outbreaks of foot and mouth disease and warmer-than-usual winter weather are preventing sickness and early deaths in key producing provinces; and 

  2. Adequate domestic supplies (in grains and natural grass) and favorable pasture conditions in West and Southwest China are improving animal feeding and increasing cattle weights. Fresh grass production reached a record high of one billion metric tons in 2011.

Consumption:

Although OAA/Beijing’s revised forecast is 13,000 MT higher than the initial estimate, China’s production continues to trend downward over the past few years. A major factor constraining China’s beef consumption is high domestic prices. For instance, from October-December 2011, the average price for beef soared 21 percent compared to the same time in 2010. Inadequate beef supplies will continue to keep domestic prices at record high levels and drive consumers to cheaper broiler meat and/or pork products.

Imports:

OAA/Beijing revised the import forecast for breeding beef cattle down by 3,000 head to 97,000 head, largely because of higher than expected domestic production and rising import prices. China announced a new policy on November 25, 2011 that all imports of breeding animals and frozen semen and embryos must show three generations of pedigree (great grandparent, grandparent, and parent generations). China is also requiring a minimum Estimated Breeding Value (EBV) or Estimated Progeny Difference (EPD) of at least 120 for boars. According to industry contacts, China’s new policies may hinder trade. Post will continue to monitor and report on these new policies.

Beef imports are forecast at 28,000MT, which is 17,000 MT lower than the initial estimate. The downward revision is mainly due to higher import prices, which is discouraging demand. During October – December 2011, the average import price increased nearly 33 percent, which is well beyond the reach of many Chinese consumers. Lower-priced pork products are substituting beef imports.

Exports:

The revised forecast for live cattle is 33,000 head, a six percent increase from the initial estimate. The upturn is mainly driven by higher demand for live cattle from slaughter operations in Hong Kong and Macau. Exports of live cattle are expected to replace some beef exports, which are revised downward by 6,000MT to 59,000. Sales will continue to Hong Kong, the largest market for frozen cuts and prepared beef, as well as to Japan, the second largest market for cooked beef.



March 2012

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