Canadian Beef Market Update: China’s Beef Imports Rise, But High Prices Create Uncertainty

Chinese beef imports have been rising on the mainland, but in Hong Kong beef supplies are tight and prices are rising.

China has imported 1.97 million tonnes of beef year-to-date in October, up 12% from 2020. The overall value of imported beef is expected to exceed US$11 billion for 2021. Although the overall level of beef prices in November has fallen slightly, they are expected to remain high with the Chinese New Year at the end of January 2022.

U.S. beef imports continue to grow, growing 615% in volume (YTD to October) compared to 2020. U.S. beef market share by volume increased from 3% at the start of the year to 6 .1% as of October (market share in 2020 was 1%). Canadian beef import volumes increased 136% in volume and 103% in value in October, although the number of suppliers is limited.

China lifted its ban on Brazilian beef in mid-December. The ban came after Brazil discovered two cases of atypical BSE in the states of Minas Gerais and Matto Grosso.

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Hong Kong beef import volumes have fallen and total volumes year-to-date in October are down 14% from 2020 as beef prices have risen due to supply shortages. Beef supply in Hong Kong is still dominated by Brazilian beef and US beef, while Indian beef has become the third largest import by volume. Brazilian beef and US beef volumes fell 21% and 31%, while Indian beef rose 47% in October. Canadian beef is down 37% in volume and 20% in value from 2020.

Slowing foodservice sales growth and high beef prices have heightened concerns among beef importers and distributors in China. Uncertainty about beef price trends over the next few months has made importers hesitant to make purchasing decisions. Cuts that have sufficient supply and rely heavily on foodservice sales are currently experiencing inventory backlogs. This drove down the prices of cuts such as the chuck eye roll. Meanwhile, prices for popular seasonal cuts in high demand — like short plates — remain high.

Beef prices also remain high in Hong Kong and beef importers remain cautious about future orders. The boneless short plate and short rib are still the most popular cuts as hot pot season continues. Importers are also looking to replace beef cuts due to rising beef prices.

The pandemic continues to challenge the retail sector

Total retail sales of consumer goods in China increased by 4.9% (year-to-date, October 2021). However, compared to the same period in 2020, offline retail traffic has tended to decline. Despite the National Day holiday, offline outlet sales values ​​fell 19.2% year-on-year, due to the severe epidemic prevention and control situation and of the spread of COVID in certain regions.

Hong Kong’s offline retail sales are still facing challenges, even though the effect of the pandemic has started to fade. Compared to the same period in 2020, offline retail sales are estimated to be down 30-50%. Online retail sales continued to grow, despite stiff retail competition. HKTV Mall, the largest local e-commerce platform, saw a 17.5% increase in sales in October compared to 2020. To compete with offline retail and generate more online traffic , HKTV Mall has opened its first offline outlet in Hong Kong. offering a local delivery service.

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Price hikes put pressure on restaurant industry

China’s restaurant industry revenue grew 25.7% (year-to-date in October) compared to 2020. However, growth has slowed, increasing only 2% in October compared to the same month. last year. This slowdown is due to COVID outbreaks in some regions.

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Rising raw material prices weighed on operating costs in the restaurant sector. In early November, Haidilao, one of China’s leading hot pot restaurant brands, announced the closure of more than 300 stores in China due to operational issues.

Foodservice sales in Hong Kong rose on the back of the local epidemic situation under control. In the month of October, foodservice revenues are estimated to have recovered 70% of their pre-pandemic sales levels. With the resumption of quarantine-free travel with the Chinese mainland expected to kick off soon, the tourism sector is expected to further drive the growth of food service sales in Hong Kong.

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