Importers in China “are operating with lower stock levels”
Editor: Rafael Tardáguila
rafael@tardaguila.com.uy
“The Chinese market currently has a number of variables in play—the main one being the trade war with Trump. At first, it drove prices up due to fears of supply shortages, but then prices fell again and stabilized at a level slightly higher than before, though below the peaks. Now we are in a more stable pricing environment,” said trader Daniel Castiglioni, head of Castitrading, who lived in China for several years working in the beef import business.
Regarding traded volumes, he said that “activity is quite subdued—there are purchases, but not many.” Due to some uncertainty about what lies ahead, importers are operating with lower stock levels. “They’re buying only a couple of months ahead, no further,” he noted.
With the tariffs imposed on U.S. beef and reduced supply from Australia due to pricing issues, “we’re starting to see growing demand in South America for different types of product—grainfed beef or high-quality steers—instead of traditional commodity beef. There is a niche and a more stable market emerging, with the intention of stepping away from the volatility of industrial beef. Large companies have realized that this segment offers a more stable market with better long-term profitability, so opportunities are opening up.”
Regarding the decision China may take to protect its domestic production, Castiglioni considered it likely that “some change will occur.” There is speculation that a quota system could be introduced, along with a tariff on out-of-quota volumes. “It’s important to understand that this is being designed mainly for Brazil—not so much for Uruguay and Argentina—but everyone gets grouped together.” The study is expected to conclude in May, be announced in June, and implemented in July.
Looking ahead to the second half of the year, Castiglioni said the most likely scenario is a firm market with stable prices.
He described the placement of sheepmeat in the Chinese market as “very difficult” for Uruguay, as it cannot compete on price with Australia.
