Shares of Brazilian beef companies plummeted after a US report showed China was severely restricting red meat imports.

The Asian country, which usually relies on Brazil for the majority of its beef, could see a 19% drop in purchases from global markets next year as its economy struggles under strict Covid-19 prevention measures, the US The Department of Agriculture reported on Thursday.

JBS SA, the world’s largest meat producer, fell as much as 6% in São Paulo on Thursday, its highest intraday trading in nearly a year. Marfrig Global Foods SA and Minerva SA suffered losses of more than 6% of him.

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The report comes amid turmoil in the beef market since the Covid-19 pandemic disrupted supply chains and pushed up prices for consumers around the world. According to the USDA, import prices for Chinese beef rose about 37% in the first half of 2022.

All meatpackers in Brazil have been hit hard by China’s slowdown in consumption, but Minerva has been hit hardest. China accounts for about 35% of Minerva’s sales, and according to Bradesco’s BBI analyst Leandro Fontanesi, the company’s overall exports are expected to decline by 4% in 2023.

In July this year, Brazil accounted for his 38% of China’s beef imports. China purchased about 60% of all Brazilian beef exports during the same period.

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Source: Bloomberg