Brazil’s Meatpackers Curb Output as China Beef Ban Lingers
(Bloomberg) -- Brazilian meatpackers are idling more capacity amid a protracted trade suspension with China and dwindling domestic demand for steak and other cuts of beef.
Half of slaughtering capacity in the world’s biggest beef exporter was idle in September, according to Jessica Olivier, an analyst at consulting firm Scot Consultoria. Meat processing has been slowing for the past year and last month dipped to the lowest in data going back to 2012.
The Brazilian government voluntarily suspended beef sales to China early last month after two cases of mad-cow disease were detected. Although the World Organization for Animal Health found that the cases pose no risk to the food-supply chain, China hasn’t resumed shipments.
Egypt and Saudi Arabia, others major importers of Brazilian beef, also aren’t purchasing in response to the mad-cow episodes. The robust U.S. market has provided a partial outlet, tripling orders from Brazilian packers this year. But volumes are low compared with China.
“Not having China as an importer is a very strong blow,” Wagner Yanaguizawa, an analyst at Rabobank Brazil, said in a telephone interview. “Brazil’s beef dependency on China has been rising.” About 60% of Brazil’s beef exports were China-bound through September.
Near-record unemployment and raging inflation have reduced per capita beef consumption to the lowest since 1996.
“Local consumption is not enough to absorb production,” said Olivier. “Some companies are slaughtering only twice or three times a week.”
Argentina resumed exports to China this week, creating potential opportunities for Marfrig Global Foods and Minerva SA, Brazilian companies with plants in that Latin American nation. JBS SA has been increasing sales to China from U.S. abattoirs.
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