China stocks continue to weigh on the market

Negotiations with China remain virtually at a standstill. A regional trader told World Beef Report (WBR) that, although some South American exporters lowered their offer prices by 7-8% from the previous week, Chinese importers continue to reject those levels. “The Chinese are still not buying. You tell them it's the best possible price, and they come back with even lower bids,” the source said.

According to the trader, buyers justify their stance by arguing that the spot market continues to weaken and that they can still source product from inventories already in China. However, he noted that import prices remain above current spot values and that much of the existing inventory was purchased at significantly higher prices.

In the trader's view, importers are continuing to pursue a speculative strategy. “Australia is already out of the market, and once Brazil also exhausts its quota, the market should strengthen again. But they're still waiting to see what happens,” he said.

A Chinese trader told WBR that demand remains weak and that importers' main concern is still to receive shipments purchased from Brazil before the imminent announcement that the country's 1.1-million-ton quota has been exhausted.

The source said that high inventories continue to weigh on the market and pointed to an additional bearish factor. “There are rumors that Minerva is liquidating inventory,” he said, a situation that could be contributing to continued downward pressure on prices.

He also noted that consumption is currently in its seasonally weakest period. “Demand is out of season, sales are slow,” he said.

Another regional broker, however, said market activity in China was somewhat better than during the previous two weeks. “At least there were more inquiries and more market testing. I noticed a change,” he commented.

A Uruguayan exporter reported bids of US$ 7,000/t CFR for shin, US$ 7,200/t for shank & heel muscle, US$ 7,000/t for topside, and US$ 7,400/t for eye round. “There was no counteroffer. It was the first bid, and it was low. Given the cautious buying interest I'm seeing, I don't think I could get more than another US$ 100/t. There are very few inquiries and very few responses when I make offers,” he said.

The same source added that one of his customers told him “the Chinese market is a disaster right now; prices keep falling,” which is why the buyer decided not to move forward with new purchases.

From Argentina, another source said that “China is almost dead despite the exhaustion of the quotas,” quoting US$ 6,100-6,200/t CFR for a six-cut cow set, confirming that the market remains under pressure with no clear signs of recovery.