What the China-Brazil trade deal means for beef producers

Analysts say a strengthening bilateral agreement between China and Brazil should have little impact on Australia’s beef exports.

A strengthening bi-lateral agreement between China and Brazil is expected to have little impact on Australia’s beef exports.

The volume of beef coming out of South America has long been considered a threat to Australia, but Nutrien Ag Solutions data and insights co-ordinator Ethan Woolley said the improved trade deal between China and Brazil should not influence sales.

Mr Woolley said while Australia had sold 153,000 tonnes of beef in the year to date to China, it needed to be put into perspective with China importing 920,000 tones of beef from Brazil from January to September.

“Beef from Brazil already had increased competitiveness in China before the strengthened trade deals, due to price,” Mr Woolley said.

“China is still recovering post-Covid in an economic sense so the more affordable beef from Brazil makes it more competitive.
“It’s not a line in the sand moment for trade between those two countries because they already have a strong trade between them for beef.”

Mr Woolley said the improved trading terms between Brazil and China “were not a bad thing for us”.

“Chinese demand is still so strong and China needs a diverse range of suppliers,” Mr Woolley said.

“The second factor is Australia’s proximity to China, which offers us advantages in terms of logistics.

“But the third factor is our strong biosecurity status – when Brazil had a suspected case of BSE (mad cow disease) last year, China stopped importing from there for a month.”

Even if China did increase its take of beef from Brazil Mr Woolley said it should not impact Australian prices.

Meanwhile, Mr Woolley said the world was watching carefully to see how incoming United States president Donald Trump would implement tariffs with trading partners.

And the ability for the US to supply its own beef needs would come into play.
Meat and Livestock Australia global market analyst Tim Jackson said the fallout from the drought in the US was still occurring,

“Although it is unclear when rebuilding will commence in the American cattle herd, it’s clear that movements in the herd will have global impacts,” Mr Jackson said.

“This could potentially reduce global supply and provide opportunities for Australian exporters”.