CHINA – China’s beef production will increase by 1% in 2018 to 7.4 million metric tonnes (MMT), with its appetite for beef forecast to grow by 3% to 8.4 MMT, outpacing demand and leading to higher imports, according to a USDA report.
China recently approved several new suppliers, most notably the United States, to help meet this growing demand.
Getting off to a slow, but steady start, U.S.-origin beef imports in 2017 were valued at US$31 million dollars (representing six months of market access).
In 2018, the number of swine on large-scale farms surpassed that of small-scale farms for the first time.
This change has resulted in a more productive swine herd, leading to an increase in domestic pork production by 3% to 55 MMT.
This increased production will continue to put a downward pressure on prices, leading to a substantial decrease in imports (down to 1.5 MMT) and an increase in exports, mainly to Hong Kong.
China’s calf crop is forecast to continue increasing in 2018 by 0.7% to 51 million head, mainly due to continued growth on large-scale farms.
Due to long breeding times, there is a lag between when large farms invest in additional cattle production and when that investment begins to result in increased production capacity.
Chinese corn farmers reduced their overall planted corn acreage this year in a continued effort by the central government to reduce massive reserves generated in the past.
At the same time, the central government has also been pushing for expanded corn utilization in the further processing industry, particularly ethanol production, which has driven up demand.
Post forecasts production in 2018 will reach 7.35 million metric tons (MMT), an increase of about 1% compared to 2017, brought about by the combination of low milk prices and high beef prices.
Low milk prices have prompted dairy farmers to slaughter their less productive dairy cattle for beef processing at a faster rate than usual, while the high beef prices generate immediate income and allows the operation to replace the less productive dairy cows with more productive ones.
Post forecasts consumption will continue to increase in 2018 to reach 8.4 MMT.
Beef demand continues to surpass supply in China.
With the increasing living standards and urbanization, new demand for beef will continue to outpace supply.
China’s per capita beef consumption was about 5.8kg/person in 2017 and is estimated to reach 6.0kg/person in 2018.
High-quality and branded beef products are particularly popular in China. Prosperous E-commerce platforms further facilitate the demand of high-end beef products from tech-savvy middle-class consumers.
In fact, the majority of steak cuts for home consumption are from E-commerce platforms, not retail supermarkets.
China continues to allow access for additional beef exporting countries; the current total is 14.
Products from the United States, Canada, and Australia are deemed “value products” in China and command a premium price.
Exports from South American countries are deemed “volume products,” and accounted for about 70% of total imports in 2017.