Positives signs in China beef demand

Positives signs in China beef demand


March shipments to China lifted for first time since December.


Chinese beef demand is coming back online following the coronavirus blow and while it's a long way from top gear, the outlook for demand across animal proteins from the world's fastest-growing meat importer for the rest of 2020 is solid.

The latest beef export data shows Australian shipments to China lifted for the first time since December, although they are still down 11 per cent year-on-year.

Analysts say so long as control is maintained over coronavirus, Chinese beef demand will continue to grow from here, with the African swine fever-induced pork shortage putting significant upward pressure on prices for all proteins in the second half of 2020.

Rabobank is still forecasting a 15 to 20pc drop in protein availability in China, which will leave a large gap and push consumers to alternatives, including beef.

Steiner Consulting currently forecasts China's total imports of beef to increase by 15pc from record levels seen last year.

Meat & Livestock Australia analysts say that should lend price support for Australian red meat exports and buoy demand during the months of uncertainty ahead.

Chinese media reported their meat imports saw a significant rise last year as the government lifted bans to fill the gap in domestic supply. China began to import meat products from 16 additional countries in 2019, it said.

MLA reports Australian red meat exports were relatively steady in March 2020, sitting just shy of 94,000 tonnes shipping weight, up 1pc on February.

Lamb exports lifted 5pc on February to hit 25,000t, while mutton exports backed off by 9pc, reaching just 13,400t tonnes swt.

Rabobank senior animal proteins analyst Angus Gidley-Baird said the return-to-business in China would probably be best described as a trickle as far as red meat was concerned at the moment.

"Where restaurants are open but it's still a one person per table type arrangement - the traditional Chinese banquet is still very much under limitation," he said.

"Factory workers and transport and logistics sound like they are moving more smoothly now but from an Australian exporter point of view, the gains are only incremental.

"How much decreased consumption effect will be incurred from COVID is still a big unknown.

"Our red meat export trade is highly exposed to food service and the Chinese consumer has not been tested like this before so the reaction is largely unknown."

International Monetary Fund projections have China's economic growth dropping from 6pc down to 1pc. Japan and the United States - the two other major beef markets for Australia - are in negative territory.

"The flow-on to red meat from that is interesting, with the impacts vastly different between cuts," Mr Gidley-Baird said.

"The theoretical conclusion is poorer economic performance means higher priced premium products suffer and red meat, generally speaking, is one of those.

"But within the carcase there are low-value cuts and people don't stop consuming - they just have to find ways of spending less.

"If Australian exporters can shuffle the product suite and hit the right markets - that is find the channels that work best - the fallout will be minimised."

For example, in slower economic conditions, the US will still eat burgers in high volumes and that is where the majority of Australia's lean trimmings go.

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