Market Morsel: Argy beef bargy

Market Morsel

China has been quick in the past year to limit imports of meat products from various countries worldwide for several reasons. These have included ASF fears (Germany), Covid fears (Netherlands) or labelling issues (Australia).

It works both ways, though. This week Argentina decided to impose a one month ban on beef exports.

Quelle surprise – The Argentine government gets in the way of exports!. Over the years, they have implemented many reforms to lower domestic pricing (incl grain).  This is one reason why the OECD considers Argentina as having negative government subsidies (see “Are Australian farmers on a level playing field?”).

Keeping consumers in Argentina happy has been a populist policy for many years, and with an election on the cards, keeping inflation under control might help pull in a few votes. It’s not popular with farmers, and strikes have been reported.

Argentina has been a significant supplier of beef to China, especially in recent years. The ban on exports to China will impact their supplies, as China still suffers through a large protein gap whilst attempting to rebuild from ASF.

Less supply into the market is beneficial for markets.

The big question is, how long does this ban last? If it gets extended, then we can expect real fireworks.