Brazilian meat exports remain focused on China

124

Porto Alegre, February 12, 2021 – Exports of the Brazilian meat industry remain focused on China. The process of rebuilding the herd may signal a sharp change in the international animal protein market between the years 2021 and 2022. USDA signals that there will be important growth in pork production in China already in 2021, which would result in a major impact on the meat industry on a global scale. The main players in the world meat market benefited from the supply gap formed in the main consumer hub. There was planning to meet the Chinese demand, which suggests investment in livestock and consequent expansion of supply. In other words, a change in China’s behavior could lead to a surplus that would affect the main meat producers. Generally speaking, there would be a drastic change in the price curve before expected.

There is no other consumer in the market capable of replacing China. Chinese demand does not show interruptions in its growth, the Asian country will always be present in the international market. However, it will not buy in the same proportion of the years 2019 and 2020. The meat industry had the perception that this was a temporary situation, and only a correction of the course of supply would correct the route in an environment in which China has a lower share of imports from the last quarter of 2021, or at most from the first quarter of 2022.

Recently, the market has been impacted by news on a new strain of ASF that resulted in losses in China’s fourth-largest pig processor. This new strain does not carry the same lethality as the previous one, but it does reduce the birth rate. However, it is very important to note that the latest report from the World Organization for Animal Health (OIE) did not confirm these cases, nor did it mention a new strain of the disease. Moreover, there have been no new reports in China. The most prudent route is to wait for confirmation from the OIE or other Chinese authorities. Until that happens, the premise still points to an accelerated process of rebuilding herds, with investments to develop an increasingly professional pig industry. This kind of activity is much more demanding in terms of animal nutrition, that is, it requires more corn and soybeans.

The OIE signals the progress of the disease within the European territory. In the case of Germany, outbreaks occur exclusively in wild animals, not having reached a single commercial farm thus far. The disease continues to advance in Eastern Europe, mainly in Romania and Bulgaria.

SAFRAS Latam