Steak out: China’s coronavirus testing chokes beef trade

Steak out: China’s coronavirus testing chokes beef trade
China is focusing on port staff and supply chain workers, after several outbreaks of COVID-19 were traced to ports across the country. (AFP)
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Updated 28 November 2020

Steak out: China’s coronavirus testing chokes beef trade

Steak out: China’s coronavirus testing chokes beef trade
  • Rigorous regime to prevent fresh COVID-19 outbreaks creates bottlnecks in supply chain, with handlers a high risk group

BEIJING: In a supermarket in downtown Beijing, refrigerator shelves normally filled with steak from around the world sit empty as tougher testing for the novel coronavirus creates supply bottlenecks and raises prices for importers.

Fresh supplies of beef won’t arrive for days, a salesman at the Suning.com-owned Carrefour outlet told Reuters — if then. That’s a big setback for the industry at traditionally one of its busiest times of the year.
“Whether we can get supplies then, and how much, remains a question,” said the sales person, who declined to be identified as he was not allowed to talk to media.
Suning did not immediately respond to a request for comment.
China began testing batches of imported chilled and frozen meat and seafood for the coronavirus in June, but significantly ramped up its inspections early this month after port workers in several cities tested positive for COVID-19, the disease caused by the virus.
The new measures, which include testing much more product than before and additional disinfection, are raising costs for importers while adding time and layers of red-tape in an industry used to working at speed to guarantee freshness.
The move is especially hurting the booming beef trade, worth $8.65 billion last year and growing rapidly, as some importers cut purchases on rising costs and weaker demand caused by consumers’ coronavirus worries.
Though China says the risk of shoppers catching the virus from chilled foods is low, officials said this week that there was still a risk of infection, particularly for handlers who repeatedly come into contact with the outer packaging of the imported cold-chain food.
In Tianjin, northern China’s most important port for meat shipments, the trade has come to a virtual halt, after a worker tested positive for the coronavirus earlier this month.
Warehouses were ordered to test all frozen meat before it could be shipped to the market, and no new product can enter, three importers told Reuters.
Three out of five supermarkets in Beijing visited by Reuters this week were short of beef.

FASTFACT

The beef trade in China was worth $8.65 billion last year.

A salesperson at Meat Mate, a restaurant and retailer selling chilled Australian beef, said it now needs to place orders three months in advance, instead of one previously, to deal with the delays. Nobody at Meat Mate’s headquarters could be reached for comment.
Now Beijing’s Xinfadi wholesale market, linked to a coronavirus outbreak in June, has also suspended sales and storage of cold-chain and aquatic products, state media reported this week.
Growing concerns about catching COVID-19 from frozen product has dented demand too.
“Orders for imported beef have halved for us as our clients have got concerned about COVID recently,” said a beef trader in Tianjin.
“They ask us when the products were shipped and whether they have been tested when placing the orders. We have been selling lots of domestic products lately,” she added.
Testing and the additional time product sits in warehouses has driven up costs for importers by as much as 200 percent, traders said.
A beef importer based in southwestern China said he has reduced imports to less than one quarter of the volumes of previous years even as China enters its peak demand season ahead of the New Year and Lunar New Year holidays.
“What if your cargoes get hit (with the virus)? It will be huge trouble. I’d rather import less,” said the importer surnamed Fu.
Slower imports come as China’s domestic pork production recovers from a severe disease outbreak and prices fall from record highs.
With more domestic meat being produced and the local economy also slowing due to the global coronavirus pandemic, beef demand was already taking a hit, said Grace Gao, manager at Goldrich International, a beef importer in Dalian.
Many beef importers have also had to deal with the impact from souring trade relations with key beef supplier Australia.
After cutting back on Australian purchases, Fu is now reducing imports from other origins too, including Brazil, Argentina, and Belarus.
“This year has been really miserable,” he said.


Saudi Arabia’s surprise cut transforms oil market outlook

Saudi Arabia’s surprise cut transforms oil market outlook
Updated 38 min 12 sec ago

Saudi Arabia’s surprise cut transforms oil market outlook

Saudi Arabia’s surprise cut transforms oil market outlook
  • From a situation at the end of last year when there was talk of Brent crude “stuck” at $50-$55 per barrel, many experts are now looking for upward of $60 in 2021
  • The “big three” of the American financial scene — Bank of America (BoA), Goldman Sachs and JP Morgan (JPM) — have all recently come out with positive outlooks for oil

DUBAI: Suddenly, the outlook for oil prices has changed dramatically.
From a situation at the end of last year when there was talk of Brent crude “stuck” at $50-$55 per barrel, many experts are now looking for upward of $60 in 2021, with some of the more bullish targeting $65 by this summer.
The “big three” of the American financial scene — Bank of America (BoA), Goldman Sachs and JP Morgan (JPM) — have all recently come out with positive outlooks for oil for the rest of the year.
BoA said a number of macroeconomic factors “could all combine to push oil above the $60 mid-2021 target we introduced back in June last year,” and acknowledged that the oil price could “easily overshoot” its projections.
JPM said a “supercycle” in oil prices — a scenario where surging demand and tightly controlled supply led to prices significantly, albeit temporarily, above current levels — could be on the horizon.
In perhaps the most bullish recent prognosis, analysts at Goldman Sachs — already among the most optimistic in the business — brought forward the date by which they expect Brent to hit $65. They now think it will be at that level six months earlier, in July this year.
“The events of the first weeks of the year have sharply reduced the risks that the market rebalancing gets derailed,” Goldman said.
So what has happened to change sentiment so significantly? While there is a range of positive economic news — from the global rollout of vaccines to a general surge in commodity prices signaling a pick-up in industrial activity — this has been tempered to some degree by the increased number of COVID-19 cases in many parts of the world.
But what appears to have made the difference for the energy analysts was the surprise decision by Saudi Arabia earlier this month to cut an extra 1 million barrels per day from its output. This unilateral reduction — greeted by the Kingdom’s OPEC+ partner Russia as a “new year present” — headed off simmering tensions within OPEC+ and accelerated the drain of global oil inventories still high after the oil market chaos of 2020.
“The unilateral and unexpected production cut from Saudi will offset in our view the near-term negative hit to demand from a quickly spreading virus,” Goldman said.
The cut by Saudi Arabia — which its Energy Minister Prince Abdul Aziz bin Salman said was a reflection of its role as “guardian of the oil industry” — will keep March production at low levels just as global oil demand rebounds sharply as vaccine rollouts encourage more global economic activity.
The other positive factors for Brent, according to Goldman, are the US presidential transition, which is likely to lead to a $2 trillion stimulus package by Joe Biden, and the continuing tight financial discipline within the American shale industry, which is unlikely to significantly raise production until oil hits $65 per barrel.
BoA pointed to the general increase in commodity prices — not just crude oil — as a sign that global economic growth was resuming, especially in Asia.
Regardless of the generally more benign global economic outlook, JPM highlighted the critical role the Saudi oil cut had played in the new bullishness for Brent, and for the longer-term outlook.
“The short-term supply cut demonstrates that Saudi is willing to cut deeper if demand is at risk, and ensures a sustained OECD (Organisation for Economic Co-operation and Development) inventory drawdown, also capable of absorbing increased supply from Libya and Iran.”
It is too early to call the end of the pandemic economic shock, but at least in global energy markets it looks as though rebalancing of supply and demand is well on track.
The oil price is reflecting that optimism too. Brent is now trading at above $56 per barrel — a post-pandemic high.