Editor: Andrés Oyhenard
andres@tardaguila.com.uy
The Chinese market continues to face one of its most challenging periods of the year, with trading activity virtually at a standstill, high inventories and buyers focused on reducing stocks before returning to the market. “Absolutely nothing from China, not even an inquiry,” a regional broker told World Beef Report (WBR).
Another trader said that the exhaustion of Australia’s quota and expectations surrounding the depletion of Brazil’s quota have yet to generate any impact on demand. “Now they tell me to wait until Brazil fills its quota for prices to recover, but the reality is that I’m not taking any sales,” he said.
From Uruguay, an exporter reported that he had also been unable to close business in recent days. “I haven’t sold anything. We are very short on production, but I’m not seeing much demand either. When demand is there, WeChat never stops. Right now it’s extremely quiet,” he said. According to the exporter, one of his Chinese clients explained that the company remains cautious because of high inventories and slow domestic sales.
Difficulties in closing deals persist in Argentina as well. One source reported transactions at US$/t 7,650 for shin & shank and US$/t 6,300 for six-cut cow beef, although he noted that the seller would have preferred to wait a few more weeks before negotiating. “He thought the market could strengthen, but he had to sell because there was no more space left in the cold storage,” he explained.
Another Argentine trader described a scenario of significant product accumulation at Chinese ports. According to the source, containers shipped before the exhaustion of Australian and Brazilian quotas are still arriving, creating logistical congestion and abundant product availability.
Seasonality is adding further pressure. With the arrival of the Northern Hemisphere summer, beef consumption enters its weakest period of the year, while seafood, poultry and pork gain market share thanks to their more competitive prices. “There is a lot of stock and it’s not moving with the same intensity as when it was purchased,” the trader said.
The weakness of the market is already being reflected in the operations of major Brazilian exporters, some of which have stopped producing for China (see Brazil section). “China is dead for us,” a Brazilian exporter told WBR.
In addition to high inventories, regional operators also point to abundant domestic cattle supplies in China and the resale of imported product by some importers seeking liquidity, even at minimal margins or losses.
One regional trader believes the current paralysis in China is driven more by uncertainty surrounding quotas than by a structural demand problem. In his view, the market has paused while waiting to see when Brazil’s quota is finally exhausted and how importers react afterward.
The source said he does not perceive inventory levels to be as problematic as many market participants currently suggest. “When I was in China, nobody was talking about stocks; everyone was talking about the quota,” he said. In his opinion, Chinese consumers continue to show positive signs and the market keeps maturing, with a growing presence of value-added products and new forms of beef consumption.
