Beef Quarterly Q1 2020: China in the Front Seat for Beef Imports in 2020
In this beef quarterly, we take a look at the impact of the coronavirus and other factors that will influence demand of the major beef importers in 2020.
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We are yet again experiencing a major disruption to one of the world’s largest beef importers, China. “The outbreak of the coronavirus in China has had a major impact on foodservice and trade. With foodservice as the main channel for sales, beef is expected to feel the impact more than others. Indications from the 2003 SARS outbreak suggest that once the virus is contained, sales and trade should rebound quickly. However, the timeframe for control remains uncertain,” according to senior animal protein analyst Angus Gidley-Baird.
In other developments…
US trade deals
Progress was made on the USMCA, and the Japan/US trade deal was approved in December. These were closely followed by the signing of the phase-one US-China trade agreement in January. Although questions remain on the details of the US-China agreement, there is now concern that the coronavirus will delay Chinese purchases of US commodities.
The UK officially left the EU on January 31, 2020, initiating a transition period that will last until January 1, 2021. We expect the impact on the beef industry to be limited within this period, as the UK remains a member of the EU single market. However, it does allow global beef exporters, such as the US, Brazil, Argentina, Uruguay, Australia, and New Zealand, to negotiate new trade deals with the UK.
New export taxes in Argentina
New tax measures designed to reduce the rate of inflation and alleviate poverty were announced by the Argentine government in early December. Taxes were imposed on a range of agricultural exports, including an increase in the beef tariff from 7% to 9%.
Rabobank Seven-Nation Cattle Price Index
After a major jump in the Rabobank Seven-Nation Index in late 2019 driven by increases across most countries (particularly the US and Brazil), prices eased in January, with Brazil and New Zealand experiencing big falls in cattle prices.
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Where to go from here
Angus Gidley-BairdSenior Analyst - Animal Protein Read more