Meat industry trade balance remains very positive in 2020

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Porto Alegre, August 26, 2020 – The trade balance of the meat industry remains positive in 2020. China has had a major impact on the world market, buying significant volumes of animal protein not only from Brazil. European Union, the United States, and Argentina also benefit from the Chinese appetite. Some data point to the partial recovery of the herd of matrices in China, but the expansion of pork supply would take at least two years, respecting the pig production cycle. It is possible that in the second half of next year there will be a reduction in the pace of imports. Monitoring these data becomes a priority for understanding the animal protein market not only in Brazil.

For chicken, in particular, Brazil is less dependent on the Chinese market, with the Asian giant accounting for approximately 17% of Brazilian shipments. The problem for 2020 is the reduction of purchases from traditional importers. Countries from the Middle East and Japan imported less this year, as a result of the pandemic. Shipments of chicken totaled 2.42 million tons from January through July, an increase of only 1.46% compared to the same period last year.

With regard to beef, there is a greater dependence on the Chinese market, as around 41% of Brazilian exports are destined for China. Hong Kong accounts for approximately 15% of Brazilian exports. As already discussed, the autonomous territory usually transfers part of its purchases to mainland China, that is, directly or indirectly, 55% of Brazilian beef exports are destined for the Chinese market. In 2020, beef shipments totaled 1.6 million tons, nearly 13.46% higher.

For pork, the dependence is even greater, around 50% of Brazilian shipments are destined for China. Hong Kong accounts for 18.85%. In other words, almost 70% of Brazilian pork exports are destined directly or indirectly to the Chinese market. Brazilian pork exports reached 570 thousand tons from January through July, a volume that exceeds by 40% the result of 2019.

The news of the recovery of the pig herd in China generates apprehension in the Brazilian market. The details of this analysis will occur in the following topic. However, the pig farming cycle needs to be respected, and China will hardly be able to fill the supply gap before 2022, ensuring at least another year of good export flow to the Brazilian meat industry.