Porto Alegre, May 20,2021 – The trade balance of the meat sector performed very well during the first four months of 2021. Pork exports were the main highlight, having grown around 25% in comparison with the same period last year. Again, the strong pace of purchases from China explains this movement. For other proteins, the performance was also positive, but two opposite pieces of news will certainly impact markets in the short and medium term:
– Change in the beef export policy in Argentina. Argentina adopted stricter criteria for beef to control domestic prices and guarantee the consumption of its population. The fact is that China absorbed substantial volumes of the aforementioned protein from the Argentine market, so creating a supply gap. The United States was the main beneficiary of this movement, with 32 meat-packing plants recently accredited. However, Brazil also tends to gain even more market, which would allow advances in beef exports;
– Saudi Arabian embargo on Brazilian chicken. The second main importer of Brazilian chicken has suspended the purchase of 11 meat-packing plants. The initial information mentions the presence of salmonella and validity problems in inspected batches. Entities that rule the sector and the Brazilian Ministry of Agriculture (MAPA) question the measure. There is no date set for the end of this embargo. The trend is that Brazil will end up losing between 15 and 20 thousand tons of chicken export a month until the embargo is lifted.
As for China, the information divergence persists in the market. While the Chinese government reports a fast, almost miraculous process of herd replenishment, private consultants and international news agencies still point to an almost uncontrolled outbreak of African swine fever, which would have destroyed an important portion of the herd of matrices. The absence of reports from the OIE increases speculation about ASF. The independent survey carried out by FAO points to a slower rate of contagion when compared to that of news agencies, the most recent being a single case in the north of the country, on the border with Mongolia. China has recently banned the circulation of pigs in five different regions. The measure is proactive, aiming to contain new waves of contagion. The consensus is that the process of recovery of the swine herd is underway, but not at the speed indicated by the Chinese government.