(Bloomberg) — Shares of JBS SA, the world’s largest meat company, and other Brazilian beef producers fell on news that China is launching an investigation into its meat imports, which have soared in recent years.
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The Asian country, the world’s biggest buyer of beef, will decide whether a surge in exports from abroad has hurt the domestic industry, the Commerce Ministry said on Friday. The investigation, launched at the request of China’s domestic industry associations, is likely to end within eight months but may be extended under special circumstances, a statement on the ministry’s website said.
Any protectionist measures from China are likely to hurt major exporters, including Brazil, Argentina and Australia, as well as companies in the US.
Concerns about a possible drop in sales sent JBS and others plummeting. The top meat packer was among the worst performers in Brazil’s Ibovespa index on Friday, down as much as 3.3%. Minerva SA fell 3.1% and Marfrig Global Foods SA lost as much as 7.8%.
Chinese imports surged between 2019 and mid-2024, dealing a blow to the domestic industry, groups representing the livestock sector from several top producing regions said in their petitions. Chinese beef producers are facing huge losses after local prices fell to multi-year lows due to oversupply and sluggish consumption.
Brazil accounts for almost half of China’s total beef imports, and the Asian country has a similar significance to Brazil, where it typically buys almost half of China’s meat exports.
“It is of course annoying,” said Roberto Perosa, president of the Brazilian Association of Beef Exporters. Still, he says Brazilian producers can be competitive even in a scenario of higher tariffs. The group will also work to open new markets for Brazilian beef in the hope of diversifying exports in the long term. Ongoing efforts include negotiations with Japan, Vietnam, South Korea and Turkey, Perosa said.
Brazil’s Ministry of Agriculture, Ministry of Commerce and Ministry of Foreign Affairs said in a joint statement that the country will try to demonstrate that its beef exports do not cause any harm to the Chinese industry and simply complement local production.
China’s move could also be a blow to North American companies.
U.S. beef exports to China and Hong Kong rose 16% in October to the largest in more than a year, according to the US Meat Export Federation. Yet total exports to China fell by 8% in the period January to October. The USMEF said it is aware of the investigation and will monitor its progress.
