Across China, beef exports are flying

TheExports of beef during the month of August amounted to 54,000 tonnes of product weight, which equates to about 80,000 tonnes of beef with bone. This represents not only a significant jump from previous months, but also a return to unrecorded levels since 2005.

According to Lote de Noticias' central report, Rosgan's information portal, Argentina exported 489,000 tons of bone-in beef equivalent, which is 46% more than at the same time. during the same period in 2018. The main factor behind this impressive growth is China.

From January to August of this year, Chinese purchases accounted for 72.6% of total shipments, while in the same period last year, their participation amounted to 52.1%.

While China doubled its purchases in one year, other destinations such as Russia and Hong Kong saw their shipments halved. This type of market flow responds to the need to manage a limited processing capacity, giving priority to the fate that currently prevails.

"The export sector is undoubtedly going through one of its best moments, with liquefied structural costs due to a lower exchange rate and a huge demand that seems to be lacking. to have other limits than its own processing capacity, "he said. Rosgan report.

In turn, he added, "it is provided in a market whose main competitor in the supply", consumption "does not offer resistance".

According to the latest estimates of known private analyzes, the impact of swine fever in China seems to be much larger than expected. It is estimated that the reduction in the stock of pigs by the end of this year – whether by death or by preventive slaughter – could reach about 70 percent of the total stock. With this, a situation that in August of last year was considered transitory, a few years have already passed, until such a global supply of proteins can increase structurally.

The number of new ratings granted by the Chinese authorities to refrigeration facilities in several exporting countries is a sign of this. In a sense, China "has already managed to measure the potential impact of this lack, knowing that its main bottleneck lies in the processing capacity of its suppliers".

Mass activation With regard to only the region, in Argentina, it has allowed the creation of some 25 factories, counting the last 8 of last month. In Brazil, last month was also announced the empowerment of 17 additional plants, which add to the 16 factories already activated. Uruguay has 27 plants authorized to export to this country, the last authorization being obtained 5 months ago. With more institutions enabled, China not only secures volume, but also a more competitive market that allows it to somehow limit the phenomenal price increase it's recording locally.

As far as the local market is concerned, we can see that the values ​​they have paid in recent months show a substantial improvement. The average value of August deliveries was USD 4,781 per tonne, which represents an increase of 17.6% year-on-year, even exceeding what the domestic market pays. The average value of what China paid in August, expressed in local currency for a dollar which then stood at $ 54, would be about $ 258 per kilogram, which far exceeds $ 100 to $ 114 per kilo per hook J & # I paid the consumption for the regular cow.

However, when comparing the international price of the cow that China normally sells in the countries of the region, Argentina is between 35% and 50% below the average of Brazil and Uruguay, respectively.

According to data published by the Institute for the Promotion of Argentine Beef (IPCVA), the Argentine manufacturing cow currently quotes $ 1.71 per kilogram, while its equivalent in Brazil is $ 2.30. per kilo and high manufacturing in Uruguay allow it to reach $ 2.58 per pound alive.

In turn, the largest difference in price is created between what the producer receives for his permanent farm and the export price of that same animal. In the case of the cow, the dollar value of canned food in the flax market is less than half of its international value. This is nothing more than the result of a few players buying on a concentration market whose supply level is virtually unyielding once the animals have entered.

"According to what has been observed in the slaughter data for the month of September on the basis of provisional figures published by the Single Register of Operators of the Agro-Industrial Chain (Ruca), with more than 1.2 million animals slaughtered and internal consumption literally stagnant, all suggests that another very good month has been closed in terms of exports. In addition, if one analyzing the evolution of the 8 factories recently authorized to export to China, it follows that all have increased their level of activity during the month, which also reflects an increase in production likely to turn to the external market, "said the Rosgan study.

But the most surprising thing is expected for October, since these factories would already be fully active for export from the beginning of the month. In turn, October is one of the last months in which we have seen significant shipments to China before the start of the New Year holidays. While locally, the supply of cows should start to decline because of their own seasonality.

Will there be a spill? According to Rosgan's analysis, more factories capable of exporting represent a higher level of competition. As a result, "without unexpected changes or interventions in the marketplace, increased competition could generate these long-awaited communication channels between what the export gets and what the breeder gets".

Again, the definitions that the new policy scenario should provide will be crucial in maintaining this degree of openness to the external market and, consequently, to competition at the local level.

stocks. According to the latest report of the Chamber of Commerce and Industry of Meat and Products of the Argentine Republic (Ciccra), "by analyzing the number of slaughterhouses and their composition, one can deduce that the producers, given the declining profitability of offspring, advanced the decision to reduce stocks, thus increasing the number of women slaughtered to levels almost never seen before (49.1%). "

In September, the vaccine farm had 1,205 million head and was the best third quarter of the last decade. Pastoralists continued to reduce their detours and women's participation in total work was higher than last September. At the same time and after ten consecutive months of decline, men's work posted a positive change in the ninth month of the year. There was a growth of 16.7% compared to September 2018.

In the third quarter of 2019, 3.66 million head of vaccine farms were slaughtered, 312.9 thousand head more than in July-September 2018 (9.3%, 312.9 thousand head ). "In this way, the refrigeration industry has achieved the best third quarter of the last ten years," they told Ciccra.

In nine months of 2019, the work of the vaccine farm accounted for 10.1 million head, exceeding by 1.4% the level of activity from January to September of last year. An increase of 140.4 thousand heads. For beef production, it was 273 000 tonnes of beef with bone (tn r / c / h) in September and was 15.1% higher than last September (35.0%). 9 thousand tons). r / c / h).

During the July to September quarter, the refrigeration industry produced 829,000 tonnes of beef. That is 7.2% more than the same quarter in 2018 (56,000 tonnes r / c / h). This is again the highest level of production since the third quarter of 2009.

In January-September 2019, 2.28 million tonnes of beef were produced, a level similar to the first nine months of 2018 (2.4,000 tonnes per day). ).

1,712 million tonnes of R / C / h would have been sent domestically in 2019, about 9.6% less than during the same period in 2018.

This means that the internal market would have absorbed 75% of total production, a decrease of 8 percentage points. At the same time, the refrigeration sector has managed to compensate for the decline in the domestic market through the development of exports. In the interannual comparison, this would have implied a growth of 47.7% in r / c / h per year, assuming that the extraordinary performance observed last August is repeated. Exports would have accounted for 25% of total production (8 percentage points).

With these figures, the beef value chain is about to set a new historical maximum in terms of exports. So far, the record is in 1969 (775 000 tonnes r / c / h) and the second record in 2005 (745 000 tonnes r / c / h), under the chairmanship of Nestor Krichner.

Low consumption The apparent consumption of beef per capita goes in the opposite direction. In the first nine months of 2019, it stood at 50.8 kg per capita and per year. He fell 6 kilos, or 10.5 percent ..

The turnover of beef exports reached $ 1,739.2 million, an increase of 41.5% year-on-year ($ 509.9 million). The average price was $ 3,552 per tph, and was 3.4% below the January-August 2018 average.