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Chinese beef buyers expect Brazil trade to resume soon despite mad cow cases

07 September 2021

Chinese beef importers say the suspension of exports by top supplier Brazil due to two cases of mad cow disease has had no immediate market impact, with some still making purchases in anticipation of a quick resumption of trade.

Reuters reports that Brazil confirmed two cases of “atypical” mad cow disease on 5 September. The cases were identified in different states. As a result, Brazil suspended beef exports to China as part of a prior agreement on the issue with China, its top beef buyer.

Despite Brazil's dominant 40% share of China's beef imports, prices had not moved by Monday 6 September and some importers were still looking for deals.

"We're still buying, factories have to keep up their stocks," said Grace Gao, general manager at Dalian-based importer Goldrich International.

In Brazil, the fourth-largest beef processor Frigol said on Monday it would furlough workers at one of its plants for 15 days, with a source with knowledge of the matter telling Reuters the move was in response to the export suspension.

Frigol's press office said the furloughs were due to a seasonal slowdown in Israeli demand and declined to comment on a possible connection to China exports. The company did not immediately give details about how many were furloughed.

“Atypical” mad cow is considered to be of lower risk than the classical form of the disease, as it occurs naturally and only sporadically in older cattle.

“Classical” mad cow disease, or BSE, is transmitted by contaminated feed and has been linked to variant Creutzfeldt-Jakob disease in people.

Brazil previously suspended exports for 10 days in 2019 after reporting an “atypical” case.

"I assume the Chinese government won't ban imports," said Pan Chenjun, senior analyst at Rabobank. "Brazil is so important."

China's customs authority did not immediately respond to a request for comment.

Brazil has shipped more than 500,000 tonnes of beef to China from January to July this year, or 38% of China's total imports, Chinese customs data show, putting it far ahead of No.2 supplier, Argentina, which supplied just under 300,000 tonnes.

Global beef supplies are very tight and prices are already at record levels, added another large Chinese beef buyer.

"If this only lasts 15 days, there will be no impact at all. Brazil is still producing, and it takes two months to ship meat here anyway," he added, declining to be identified because he is not permitted to talk to media.

While China's imports of pork are falling because of a recovery in domestic supply, Chinese demand for beef continues to grow.

Ireland, a smaller beef supplier to China, reported a case of “atypical” mad cow disease in May last year. It has not yet been able to resume exports.

Read more about this story here.

Source: Reuters


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