Bloomberg News

China Beef Imports Seen Doubling by Rabobank Over Five Years (1)

December 24, 2013

China, the world’s biggest meat consumer, may double beef imports by 2018 as consumers can afford to buy more products they deem to be safer and healthier, according to Rabobank International.

Shipments from overseas may exceed 500,000 metric tons as domestic output fails to meet demand, Beijing-based analyst Pan Chenjun, said in an interview. Consumption of processed pork products will rise by more than 10 percent a year, she said.

A gain in China’s demand for higher-priced meat will help the beef producers including Australia and Brazil and benefit processors such as Tyson Foods Inc. (TSN:US) and Smithfield Foods Inc., owned by Hong Kong-based Shuanghui International Holdings Ltd. China last week said it is seeking an agreement to resume U.S. beef shipments by July 2014 after they were banned in 2003.

“China has a structural beef shortage” after losses in 2006 prompted farmers to slaughter herds, Pan said yesterday. Rising grain prices and the long growth cycle for cattle have prevented a quick rebound in output, she said.

Beef imports in the first 10 months totaled 253,196 tons, compared with 38,251 tons in 2012, according to data by the U.S. Meat Export Federation. While this year’s growth has been exceptional because of the domestic shortage, imports may jump again if prices of overseas supplies fall, she said.

Cattle futures for February delivery on the Chicago Mercantile Exchange rose 0.2 percent to $1.34175 a pound at 1:19 p.m. Beijing time, up 1.4 percent in 2013 after rising 8.9 percent in 2012. Hogs for February settlement were little changed at 86.2 cents a pound.

‘Robust Growth’

There will be “steady and robust growth” in China’s beef demand during the next five years, Joel Haggard, the U.S. Meat Export Federation’s vice president for the Asia-Pacific region, said by phone from Hong Kong. “A growth rate of 10 percent a year is very realistic.”

China may want to add the U.S. as a supplier to help diversify its sources, Pan said. The country has banned American beef since a mad cow disease scare in 2003. It is also studying to lift a ban on Brazilian meat, Agriculture Minister Antonio Andrade said Nov. 8.

Consumers will eat more processed meat because a more urban lifestyle demands convenience, benefiting Shuanghui and overseas companies that can cater to Chinese consumers’ tastes, Pan said. Spending on meat products is forecast to gain more than 10 percent a year in the next five years, out pacing a 2 percent annual increase in volumes, indicating people are buying more expensive products, she said.

As China produces almost all its pork, it will need to import more corn and soybeans to feed the herds, Pan said.

Corn Imports

The nation’s corn imports may total 10 million tons in 2017, according to Pan. Last year’s shipments were a record 5.2 million tons, customs data show. The country already buys more than 60 percent of the globally traded soybeans, U.S. Department of Agriculture data show.

Corn, used to fatten cattle in both the U.S. and China, traded at $4.3325 a bushel on the Chicago Board of Trade, compared with $9.78 a bushel on Dalian Commodity Exchange.

To contact Bloomberg News staff for this story: William Bi in Beijing at wbi@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net


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