SIAL and the US hit the pause button on China

As is customary ahead of one of the world’s leading food fairs, SIAL Shanghai, trade with the Asian giant has shifted into “pause mode.” The new edition of SIAL begins next Monday, 19 May, giving meat market players a key face to face to gauge and plan business with China for the weeks ahead.

Another variable emerged this week: after the 90 day tariff truce agreed by the US and China, “many importers expect” the United States to return as a supplier, especially of grainfed beef and offal, a regional trader told World Beef Report (WBR).

Even so, total Chinese import duties on US beef will now stand at 32 %—and at 57 % for pork—still relatively high versus competitors. According to Beef Central, the 32 % levy on beef comprises a 10 % penalty for US fentanyl tariffs, a 10 % reciprocal retaliation duty and the 12 % most favoured nation (MFN) rate.

“This is very good news, because our main concern was the overall economy,” Uruguayan broker Gabriel Martín, based in China, told Radio Carve on Monday. The United States supplies just 6 % of China’s red meat imports “but, in value terms, it ranks second only to Brazil, so replacing it would have been very difficult.” Martín stressed that the development is positive for South America: “If China’s economic engine starts up again, it will demand more meat from the region.” He added that Brazilian beef prices dropped US$/t 300–400 last week. A middleman quoted WBR values of US$/t 5,400–5,500 for Brazilian eight cut forequarters and US$/t 5,200–5,300 for Argentine six cut cow packs. A Uruguayan packer received bids of US$/t 3,300 for bone in brisket and US$/t 3,400 for bone in navel plate.

An Argentine broker told WBR there is “too much speculation” and “few certainties” about what may happen at SIAL. Demand exists, he said, but “very few benchmark prices” for closing deals. “Some predict a post fair price drop followed by a rebound. Everything is quite uncertain for now.” Even so, he has an “optimistic view” of the US–China tariff truce—just as oil and soybeans improved, beef could benefit too. “Mercosur beef is consumed by the Chinese worker. That worker’s job was at risk while the trade war escalated.”

According to the weekly OIG+X report, prices fell US$/t 100–200 from pre Labour Day holiday levels (the break ran through 5 May), especially for Brazilian and Argentine product. Most Chinese importers remained cautious, taking only small lots to meet immediate needs; large volume deals were rare.