Silverside, Outside Topside, Inside Shank Cap of topside Eye round Shoulder Blade Shin Knuckle Flank Tenderloin Striploin Brisket Neck Chuck
Russian version Versão Portuguesa

FOB Mercosur - Chinese calmness worries Mercosur exporters.
July 12, 2018

A series of factors are coming together to paint a g rim picture of the immediate future for China, one of the driving forces of global beef demand.

The trade war unleashed by the Trump administration over the Asian power seems to be in its infancy, despite the fact that tariff increases are already in force in several countries. This is exacerbated by the weakness of the Chinese yuan against the dollar and the strict control in the entry of products from Hong Kong through the grey channel. According to a regional trader, the Chinese market is down due to uncertainties over the exchange rate. The source reported deals from Uruguay for shin & shank at US$/t 4,800 CFR, three forequarter cuts (chuck roll, neck and brisket) for US$/t 3,750. For its part, the industry is handling prices of US$/t 4,000 for 90 VL robbed forequarter, "which is difficult to place having cheaper options in Argentina and Brazil that are pricing around 5% less".

From Argentina, sources reported sales of round cuts at US$/t 5,300 and chuck & blade at US$/t 3,900. "Reality tells us sales are getting more difficult. Today to close a transaction you have to accept lower prices. Theres no beef market where currency devaluations havent had an effect", another broker explained.

On the other hand, the grey channel via Hong Kong "is completely locked", operators a greed. Stricter administrative controls from Chinese Customs authorities also include other protein products such as pork.

"There are thousands of delayed containers. Someday they will release them and th at will flood the Chinese beef market. This is a common practice when they press to lower future purchasing values", a trader explained.

A Uruguayan exporter said that this situation for the Chinese market generates "concern" b ecause "there are only a few months left" to do "good deals" with China for the upcoming New Year. He added that the industry is "having a hard time" to compete with other markets in the region while facing higher cattle costs and a currency devaluation rhythm that does not accompany that of the neighbours. "Today we are having negative margins; at some point there should be an adjustment if there is no rapid change in any of these variables", he anticipated.

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