China resumes activity after SIAL with mixed views

Following another edition of SIAL Shanghai, the Chinese market showed somewhat more activity again, with buyers resuming inquiries and validating firm prices for some products, according to some agents, although others hold the opposite view.

A regional trader reported to World Beef Report (WBR) deals for bone-in flank from Uruguay at US$ 5,300/t CFR, bone-in brisket at US$ 5,200, shin & shank at US$ 8,300 and brisket bone at US$ 2,900. According to the source, a dynamic already seen weeks ago repeated itself: those trying to bid below the values sought by the industry are quickly pushed out of the market. “Those who place bids below the offer lose,” he summarized.

A Brazilian exporter told WBR that it was offering June shipments with references of US$ 7,000/t CFR for the 8-cut forequarter, shin & heel muscle at US$ 8,600 and flanks at US$ 6,400. For the butt, values of US$ 7,600/t CFR were mentioned, including knuckle, flat and eye round, while some premium cuts, such as cube roll, were offered above US$ 8,600.

According to a Brazilian trader, the Chinese market “lost momentum” after the fair, with buyers becoming more cautious and prices coming under downward pressure of around US$ 150-200/t on average. Demand appears very selective, concentrated on one or two specific products, without broad-based interest. The trader added that, for example, the suspension of a large JBS plant (SIF 51) initially did not generate a strong market reaction, although the news added concern within the sector due to the risk of further suspensions at other plants. “With China, anything can happen; it is an unpredictable market,” he summarized.

Along the same lines, an Argentine trader described SIAL as “strange,” with the feeling that many participants failed to close the deals they had planned and with the atmosphere cooling as the days went by.

According to this source, much of the uncertainty revolved around Brazil and the management of the Chinese quota, in a context where Russia is also seeking to gain space. “Russia has already shipped 250,000 tons of meat in general and wants to expand volume,” he said. In the first four months of the year, China imported just over 6,000 tons of beef from Russia.

In Argentina, there was demand for bones, but the beef business faced more resistance. Packers were asking US$ 7,000/t for cow beef in 6 cuts, while Chinese bids ranged between US$ 6,700-6,800/t.

The trader also warned that China continues to hold high inventories, making it riskier to operate at elevated prices. His reading is that any shortage left by Brazil from August onward could be covered without major difficulties by countries that still maintain quota availability, such as Argentina, Uruguay, New Zealand and eventually the United States. “I don’t see cow beef in 6 cuts exceeding US$ 7,200/t,” he estimated.

One of the segments showing the strongest momentum at the fair was grainfed beef. Lower availability from the United States and the imminent exhaustion of the Australian quota are boosting interest in this type of product, where Brazil does not have a significant supply.

From Uruguay, another trader summarized the fair as having few concrete deals and a great deal of caution among buyers. “Few inquiries and zero business,” he commented, although he highlighted that the event was useful for advancing contacts and opportunities linked to other markets.

The overall balance leaves a mixed reading: China resumed activity after SIAL, but the market remains divided between signs of firmness in some products and caution due to high inventories and uncertainty over global supply in the second half of the year.