Weaker demand may create surplus of Brazilian beef
The expected filling of Brazil’s beef export quota to China by midyear, combined with a growing supply of feedlot cattle ready for slaughter, is likely to push cattle prices lower in the second half, JBS CEO Gilberto Tomazoni said on Tuesday.
A potential drop in demand for Brazilian beef after the annual Chinese quota of 1.1 million tonnes—exempt from an additional 55% tariff—is filled could generate excess supply that will need to be redirected to domestic and international markets, Tomazoni told journalists during the 12th Annual Brazil Investment Forum hosted by Bradesco BBI.
In addition to the roughly 600,000-tonne gap between China’s quota and Brazil’s export volume last year, Brazil will also lose tariff-free access for about 350,000 tonnes shipped at the end of 2025 but counted toward China’s 2026 quota because they arrived at Chinese ports this year.
Even rising demand from other Southeast Asian countries and the United States—where cattle supply remains tight—will not be enough to absorb the roughly 950,000 tonnes China is expected to stop importing from Brazil in 2026, Tomazoni said.
“That’s a significant volume. China used to account for close to 50% of Brazil’s beef exports,” he said. “Markets are growing, but not at the pace needed to offset what China may no longer buy. Brazil is seeking new markets, but the U.S. imports different products [than China].”
He added that, despite the ongoing downcycle in cattle supply, prices could still ease in the second half.
Despite China’s quota limits and the war in the Middle East, Tomazoni and other industry executives at the forum expressed optimism about global meat demand.
Even before the conflict, consumption had been rising, supported by higher incomes and increased protein intake, said Minerva Foods CEO Fernando Galletti de Queiroz. The war has further heightened concerns over food security, he added.
“In the short term, we are seeing countries increase their strategic reserves,” Galletti said.
Like Minerva and JBS, MBRF has seen higher logistics costs in the Middle East due to rerouted shipping and land transport, higher oil prices, and increased insurance premiums, said CEO Miguel Gularte. However, stronger demand across meat categories since the start of the conflict has allowed companies to pass on costs, he noted.
Galletti also pointed to opportunities to expand exports to markets still closed to Brazilian beef, such as Japan and South Korea, as well as to other Southeast Asian countries. Tomazoni highlighted potential gains in the European Union and Africa. In Brazil, the World Cup and elections are also expected to boost meat consumption, Gularte said.
Although cattle supply for slaughter in Brazil is expected to tighten due to the livestock cycle, the country benefits from ongoing productivity gains driven by genetic improvements and better nutrition.
“There is enormous room for growth. Brazil will set the tone in the global beef market,” Tomazoni said.
*By Clarice Couto — São Paulo
Source: Valor International
https://valorinternational.globo.com/