China's taste for beef may spur Smithfield repeat

The growing taste of Chinese consumers for beef may herald a tie-up with a foreign export group, Rabobank said, even as Shuanghui International is undertaking the acquisition of US pork group Smithfield Foods.

China's beef imports have grown "astonishingly" this year, albeit from relatively low levels, jumping 10-fold in the January-to-April period compared with the same period of 2012, Rabobank said.

The strength of imports reflects the "imbalance between expanding consumption and stagnant production" which has sent retail beef prices soaring to $9.40 per kilogramme as of May, up 33% year on year.

Prices of fattened cattle are rising even faster, which illustrates the serious supply shortage".

Foreign deals?

The signing by Beijing of a memorandum of understanding over legal import of Indian buffalo meat, which has up to now been smuggled into the booming Chinese market, looks like heralding further deals.

"This signals that China will further open the door to imports from the global beef market," Rabobank said, adding that it could herald corporate activity too.

"This scenario may trigger interest from Chinese beef players in exporting companies and countries.

"Amidst these conditions, we cannot rule out the possibility that Chinese beef companies may seek partnerships with counterparts in important beef-producing countries.

Trade ties

Rabobank highlighted in particular Australia, the top exporter to China, as a likely target for Chinese interest.

Australia accounted for 47% of China's beef imports, by volume, in the January-to-April period, and its exporters "continue to move quickly to position themselves in the Chinese market", the bank said

Howver, Uruguay is "catching up rapidly" thanks to competitive prices, raising its market share to 25%.

Uruguay's exports to China in the year to May soared 480% to 33,000 tonnes.

New Zealand is another major exporter of beef to China, as it is of dairy products too.

Horsemeat scandal hangover

The comments came in a report in which Rabobank also flagged a boost to the European Union industry from the tightened food security measures which have followed the furore of horsemeat being passed off as beef.

"The impact of the horsemeat scandal has resulted in another price increase for cattle in the EU," hitting a record E4.44 per kilogramme in May, up 50% from a low in October 2010.

"The increase in prices has been supported by higher demand for beef from players having to replace horsemeat with real beef."

The quest for beef may also be behind a surge in EU imports from Brazil, up 42% to 25,500 tonnes in the year to May.

Source: http://www.agrimoney.com/news/chinas-taste-for-beef-may-spur-smithfield-repeat--6022.html

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