Beef import outlook remains bullish on demand spurt, ASF pressure
The growth in beef consumption has continued to outstrip the growth in beef supply in China. Demand growth was estimated at 9.75% in 2019 and accelerated to 14.8% in 2020 against a backdrop of elevated pork prices due to ASF.
China’s self-sufficiency remains low and likely below 50%, despite the Ministry of Agriculture targeting 85% self-sufficiency by 2025.
Farmers have not been eager to raise cattle and have been focused on hog production in recent years. It takes significantly less time to raise a hog for slaughter than a cattle, and until recently, hogs were very profitable to raise.
Cattle farming is more capital intensive and requires longer term investments. Additionally, due to ecological protection measures, grazing cattle in grasslands is more difficult and farmers instead need to feed relatively expensive corn.
Given these factors, it seems likely that beef demand will continue to grow faster than domestic supply, which should offer foreign exporters broad opportunities in the future.
Omicron case-count rises in China, domestic travelling suffers
We noted in our commentary yesterday “that it will be only a matter of time before health officials in China will need to battle this new variant” but the reality dawned sooner than expected.
Late Monday, northern Chinese city of Tianjin reported a positive case from a person traveling from Europe. Today, Guangzhou in southern China announced it had also detected the new variant.
So far, the details of Guangzhou case are very concerning as the man had returned from overseas on November 27, did two weeks in central quarantine, and tested negative the entire time.
However, he was tested positive on December 12as part of his post-quarantine health monitoring.
More infectious strains make China’s zero-tolerance approach more difficult. With original covid strain, health officials considered close contacts to be anyone in the same household or office within two days before someone developed symptoms.
For Delta variant, that measure became anyone in the same office or apartment building four days before someone developed symptoms. Contact tracing previously might have meant 330 close contacts, but that range expanded to 50,000 to 60,000 people for delta variant.
With Omicron being even more infectious, this variant will put further pressure on China’s zero-covid efforts.
Even before Omicron, travel and tourism was suffering. On Tuesday, Xiamen Airport reported that its passenger throughput in November was down 56.4% y/y.
The national statistics will be released next week, but this early data for Xiamen shows the data for November travel and tourism was down sharply.
US weekly soybean exports to China plunge, corn exports spike
Weekly US soybean exports to China during the week ending December 9 this year plunged 42% week on week to 840,676 tons. This accounted for less than half of the total soybean exports during the week, down compared with 65% the week before.
Meanwhile, US corn exports to China during the same week more than doubled from the previous week to 275,350 tons. This represented 34% of all US corn exports in the week.
In addition, exports of 119,729 tons of US sorghum last week nearly all went to China. In contrast, none of the 245,090 tons of US wheat exports last week sailed to China.