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Canadian Cattlemen Oct 22, 2021

China reshapes global beef markets

World events have made it increasingly difficult to figure out where the bubble in the level really is. We saw hundreds of Canadians on television protesting the detention of two Canadian citizens by the Chinese Communist Party for 1,000 days. The allegations are supposedly unrelated to political events everyone knows they are connected to. Yet average citizens are doing their best to live some semblance of normal lives and farmers, ranchers and food production workers keep churning out food.

Meanwhile, that same Chinese economy is reshaping the global beef demand picture in significant ways, affecting both grain-fed and grass-produced beef.

Brett Stuart of Global AgriTrends is one of the premier observers of global meat trends, using extensive data tracking and yet spending a lot of time on the ground in overseas markets observing and talking to traders. Stuart is usually optimistic but realistic. But recently at international trade committee meetings at National Cattlemen’s Beef Association, he could hardly contain himself.

China is reshaping the global cow herd with aggressive buying. Various factors are influencing the global beef situation, including weather and slaughter trends, cash flows from exporting nations and China’s voracious appetite for beef. China is “mining” Brazil’s cow herd. Poor pasture conditions have cut their slaughter by eight per cent. Australia’s slaughter is down 27 per cent from a year ago and Argentina’s government continues to ban or severely limit beef exports to keep a lid on domestic prices. That’s another 250,000 MT of beef not on the world market. Uruguay is slaughtering much of its herd to ship to China. India’s exports are down seven per cent compared to 2019.

In general, global beef demand is strong, the population is growing every year and there is more money in circulation. While COVID has been tough on overseas economies, Stuart sees a further surge in demand with more recovery from COVID yet to come.

China’s beef demand is the strongest of the last 10 years. Part of the demand is the traditional “hot pot” style, with diners cooking fresh beef at their table. But three or four years ago, a Japanese-style “grilling” trend began, and that is boosting demand.

An estimated 65 per cent of the pig herd has been liquidated and pork prices are down 50 per cent from a year ago.

For perspective, Stuart said China’s beef imports in 2017 were one million MT. He expects 2021 imports to jump to three million MT. Beef prices keep going up and up and are hitting $6.23/lb. at retail.

China is a $10 billion total market for imported beef. The U.S. is getting high beef prices. While Stuart didn’t break out U.S. vs. Canadian numbers, demand for grain-fed beef can virtually only be satisfied by U.S. or Canadian sources. Tier 1 cities are the primary sources of demand and he estimates the market is approaching 15 lbs./capita/year.

The U.S. now has substantial agreements with Japan, South Korea, China’s Phase-1, CAFTA/DR (Central America and the Dominican Republic) and the CUSMA/USMCA at work. That’s not including smaller trade developing markets in South America, Africa and other spots around the globe. South Korea alone has advanced 18 per cent so far.

But Stuart’s biggest prediction is that China’s market for beef will be bigger than Japan’s by year’s end. The Chinese are outbidding Japanese buyers for some items, with the beneficiaries being the U.S., Canada and some Australian-fed beef. He sees the global supply further tightening in 2022, with demand from a COVID recovery still ahead.

China has reworked the global beef market, buying more U.S. beef and buying more diverse cuts...


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