Editor: Andrés Oyhenard
andres@tardaguila.com.uy
Chinese buyers remain highly cautious and continue to pressure prices lower, while the market waits for Brazilian supply to decline and seasonal consumption to improve.
A Chinese trader told World Beef Report (WBR) that the market now has a clearer picture of the volume shipped from Brazil during June, removing part of the uncertainty and providing a positive factor for price formation.
However, he warned that this effect is being offset by heavy pressure in the spot market. "Minerva continues to clear inventory in the spot market at very low prices," the source said, a strategy that continues to prevent any meaningful recovery in quotations.
An Argentine broker also described an extremely depressed market. "The Chinese market is dead. My impression is that it will remain that way for several more weeks until it wakes up," he said. He attributed the weakness to a combination of seasonal and supply factors: summer has reduced beef consumption, domestic production remains abundant, and prices are now around US$ 1,000 per ton below the levels seen during the SIAL exhibition in May. In his view, any recovery is unlikely before late August or September.
A regional trader described the market as virtually paralyzed. "Everything is dead," he summarized. As an example, he noted that Chile concluded business for bone-in forequarters at US$ 5,150 per ton, about US$ 500 below prices seen during SIAL and nearly US$ 750 below the levels prevailing just a few weeks ago.
For Uruguay, he added, Chinese buyers are bidding around US$ 7,300 per ton for shin & shank, approximately US$ 1,000 below SIAL references. A Uruguayan packing plant reported receiving bids of US$ 7,100 CFR per ton for a mix of shin & shank and flat, and US$ 4,200 per ton for bone-in flank and brisket, also about US$ 1,000 below mid-May levels.
In the trader's view, the market is unlikely to regain momentum in the short term. "We'll have to wait until Brazil's quota has been fully absorbed and the summer is over, which is seasonally the weakest period for demand. Only then should prices begin to recover as demand improves," he said.
Regarding China, a Brazilian processor told WBR that some inquiries for August shipments reappeared during the past week, although exclusively for cuts such as shank and at prices well below exporters' expectations. "This is not the time to start cutting prices. We believe that, with no quota available for Brazil, buyers are currently just seeking price indications and requesting offers," he said.
