Jul 22, 2014

Brazil's Beef Exports to China Expected to Surge in 2015

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

At recent meetings held in Brasilia, the Chinese government announced a lifting of embargoes that had been levied against various beef processing facilities in Brazil due to sanitary concerns. As a result, Brazilian beef exporters are expecting to sell between US$ 700 million to US$ 1.2 billion worth of beef to China in 2015. That is the estimate of the Brazilian Minister of Agriculture Neri Geller after meeting with Chinese officials last week in Brasilia.

Nine beef processing facilities in four different states were cleared for sales to China. Five of the facilities are in the state of Sao Paulo with others in Mato Grosso, Goias, and Rio Grande do Sul. The individual names of the facilities has not been released, but that is expected within 15 days. The Minister indicated that they will continue to work with the Chinese government to clear the way for additional facilities to be certified for sales to China.

According to the Minister, in 2009 Brazil exported US$ 2.5 million worth of beef to China and by 2012 that had grown to US$ 37.7 million. In 2009 China imported US$ 44 million worth of beef from all sources and that grew to US$ 255 million in 2012. According to data released by the Minister, China imported from all sources US$ 1.269 billion worth of beef in 2013.

Brazilian beef producers and processors are hoping to capture an increasing market share of the beef demand in China. Brazil and China are major trading partners with Brazil supplying the largest share of soybeans and iron ore imported into China.

As part of the recent BRICK Summit, the Brazilian Minister also met with Russian President Vladimir Putin in an attempt to get Russian approval for the reauthorization of various beef processing facilities to export beef to Russia. Russia had rejected numerous facilities due to sanitary concerns, but Brazilian officials suspect that domestic politics played a bigger role in the embargo than alleged sanitary concerns.