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CME: Producers Still Facing Challenge of Limited Supply of Hormone-free Beef

17 December 2019

US - Both US and Chinese officials confirmed on Friday that a partial deal had been reached, resulting in lower tariffs on some Chinese products and higher purchases of US agricultural goods, according to Steiner Consulting Group, DLR Division, Inc.

Many of the details regarding this deal are still unknown but one number that was consistently thrown around was $40- $50 billion worth of US agricultural products purchased annually.

To be clear, we did not see any confirmation from the Chinese side on this but figured it would be worth looking at the meat products China and Hong Kong have purchased from the US in the past decade in order to bring some context to the numbers.

We are including Hong Kong in the mix since we think that gives you a better idea of the level of demand in this market. Below are some key numbers:

We rolled beef and poultry together since purchases from Mainland China have been minimal in recent years. Various non-tariff barriers (BSE, Avian Flu) have prevented shipments of US beef and poultry products to China Mainland.

Combined sales of beef products to China and Hong Kong in 2018 were over $1 billion, a number that was significantly reduced this year as Chinese officials appear to have tightened up border controls.

Assuming tariffs on US beef are brought to the same level as other countries, US producers still face the challenge of the limited supply of hormone free beef and the relative high price of US cattle vs. cattle prices in other countries.

Cattle prices in Brazil have increased sharply in recent weeks but they are still about 40 percent lower than US fed cattle values. And that’s before we account for the NHTC premium (no hormone).

As for poultry, there appears to be a clearer path towards shipping more products to the Chinese market, especially chicken paws/feet that would command a premium vs. current value.

Total exports to China/HK in 2014 hit $808 million, with mainland sales at $299 million.

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TheCattleSite News Desk


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