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Will beef become the new pork in China?

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Will beef become the new pork in China?

Certainly, pork remains the default meat for Chinese diners, who eat more than half the world's pigmeat production, and are to expand consumption by some 2.5% this year to 56.3m tonnes, according to the US Department of Agriculture bureau in Beijing.

Growth is being fuelled not just by growing wealth among consumers but by the outbreak of H7N9 bird flu, which has cut the popularity of chicken.

"China's avian influenza outbreak influences consumers away from poultry towards red meats and fish," the bureau said.

Floating dead pigs

However, China's beef consumption looks set to rise even faster, albeit from a far lower base, boosted by some food safety concerns over pork too, after the discovery of more than 10,000 dead pigs dumped in Shanghai's Huangpu river last year.

"Public health concerns continue to linger over last year's 'floating dead pig' incident," the bureau said, adding that "there continues continue to have a negative impact on consumer purchase decisions related to pork".

Chinese beef consumption is seen hitting a record 6.26m tonnes this year, growth of 5.1%, and 65,000 tonnes more than previously expected.

While still small by comparison with pork demand, that is enough to place China as the world's third-ranked beef consuming country, behind the US and Brazil.

Beef goldmine

The trend is having a big impact on the world beef trade, with China looking abroad for now to meet its taste for beef – proving big profits for those in the chain.

China's average beef import price last year, at $4,313 a tonne, was an "astounding" 55% below the average retail price, which has been rising at a rate of 30% a year, the bureau said.

It raised to 550,000 tonnes its forecast for China's beef imports for 2014 - a 19-fold increase in three years, and promoting the country to equal fourth (with Hong Kong) among buyers.

Canada's exports to China rose six-fold to 24,373 tonnes, carcass weight, in 2013 although Australia is the top supplier, with a tripling to 154,834 tonnes slaughter weight, according to Rabobank.

Australia impact

Last month, overall Australian beef exports set a January record of 64,642 tonnes, "underpinned by strong Chinese and Korean demand ahead of an early lunar new year celebrations", Vianne Lai at National Australia Bank noted.

This demand has offset somewhat the dent to Australian cattle prices from east coast drought, which has encouraged producers to increase slaughter rates, which hit a 15-year high of 9.1m head last year.

"In the second week of February, slaughter rates reached unchartered territory in eastern states as seasonal conditions deteriorated," Ms Lai said.

In fact, rains last week have encouraged a recovery in the eastern young cattle indicator - Australia's benchmark pricing index, to 311.25 Australian dollar cents a pound, up 15.75 cents week on week.

The index a month ago hit a four-year low of 278.5 cents a pound.

Feed impact

However, China's beef demand looks likely to have an increasing impact on feed markets too, as the country's domestic industry grows.

"Producers are utilising abundant corn and alfalfa supplies to support their expanding beef production," the bureau said.

Already the country imports more than half its 1.5m tonnes of alfalfa supplies, mainly from the US.

Given that cattle require roughly 50% more feed per kilogramme of weight gain, compared with pigs, the impact on grain demand, and market sensitive corn imports, could prove significant too.

By Mike Verdin

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