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Wednesday, December 07, 2022

The main market for meat “collapsed” and they fear for the ships that are in transit

The main market for meat "collapsed" and they fear for the ships that are in transit

“The Chinese market collapsed.” This is a phrase that is repeated among beef exporters who express their concern as they warn that in September there was sharp drop in cut prices for that destination, On the other hand, he already fears that freight contracts on ships bound for the Asian market will be renegotiated.

“We are witnessing an unprecedented decline in the Chinese market, which is very important for Argentina because It accounts for about 75% of meat exports, The price reduction is very significant, more than 20%. Products that we sell for $6,500 . used to sell [la tonelada] The set sells for US$4,800″ today, said Mario Ravetino, president of the ABC Meat Exporters Consortium. Country,

In this field he says that it is the result of the combination of elements, the most distinct of which “Devaluation of the Chinese currency” And an atmosphere of uncertainty due to “economic stagnation”, in addition to a surplus of pork, which, in turn, led that country’s government to restrict, on the one hand, import licenses and, on the other hand, companies operating financial aid.

Argentina’s dependence on the Chinese market for beef exports has become crucial. According to data provided by the Institute for the Promotion of Argentine Beef (IPCVA), in the first eight months of the year, China purchased 321,935 tonnes of product weight from the country, 77% of the total shipments. This was 11% higher than the same period in 2021. In value, it did so for US$1,604.4 million, up 53.6% from the first eight months of last year.

“There’s a lot of meat on the ships going to China, which” We don’t know if the Chinese in the port of destination are going to pay the contract as it was arranged in July or if they are going to renegotiate it downwards because of the current prices., So, there is a lot of uncertainty,” said Miguel Jairala, economic and market adviser to the ABC Consortium of Mediums. Although an advance fee is charged before the goods are shipped, there is always between 30% and 50% to be paid when it reaches its destination, which is again subject to negotiation.

As Jairala elaborated, what is happening now is a trend that began to be observed in June, but deepened in September. “Exports to China were at record prices till May. The next two months were good, but The declining trend ended in September with a fall in prices and a change in the overall tone of the business.Prices rose from US$5,158 per tonne in June to US$4,741 in August. Although September prices are not yet available, he assures they will fall further. Discard beef which is the most sold to China. goes.

Mario Ravetino: “We are witnessing an unprecedented decline in the Chinese market”

Exporters fear that what happened in late 2019 and early 2020 will repeat itself. “It was a very significant drop and there was a lot of conversation; They rose from US$6,500 a tonne in November to US$4,000 in January.” In this context, what was offered six weeks ago is now US$5,800 a tonne.” will pay.”

“If the Chinese see that they have huge stocks, it will complicate them even more and we, although we are another supplier, we send them between 40,000 and 50,000 tonnes, less than half that. [mes]with whom Brazil is the one to move the needle [primer proveedor], If the problem is stock, it won’t be solved in the short term“, Told.

“Brazil has been breaking records for shipments to China month on month since March, but The importer’s vision changed because he no longer looked at the local demand that absorbs those quantities.“, He added.

For livestock consultant Viktor Tonelli, what is happening with China is a temporary issue that will improve rapidly, so he estimates the lost price will be recovered between November and December.

,Due to the COVID pandemic, cities in China were closed and this had a negative impact on the economy. In addition, its economic activity is slowing in line with the world economic slowdown affected by Russia’s invasion of Ukraine, where energy and costs have increased. in this context, China has accumulated a 13% devaluation in the past seven months, so importing meat becomes more expensive”, he indicated.

Consultant Victor Tonelli
Consultant Victor TonelliIgnacio Sanchez – The Nation

For Tonelli, the election of new officials in the Communist Party of China every five years also created uncertainty; This year it is falling on 16 October. “All this movement made it more complicated and created a lot of uncertainty in the markets because Multiple versions run, To the point that Australian brokers say that most of the authorities that define the purchase of meat and other supplies for consumption are away from operations until the situation stabilizes. Told.

“Very likely, at the end of October, when that uncertainty is over, business will flow again and there will be a recovery,” he concluded.

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