Brazil quota depletion underpins domestic beef prices

China's beef import market in the first half of 2026 showed a concurrent upward trend in both volume and price. Data from the General Administration of Customs of the People's Republic of China (GACC) indicate that from January to June, China's cumulative beef imports reached 1.53 million tonnes, up 17.54% year-on-year.

On a monthly basis, China beef imports in June stood at 245,800 tonnes, rising 18.77% month-on-month and 13.43% year-on-year. In terms of supply structure, Brazil alone accounted for 56.99% of total imports, followed by Argentina and Australia with 15.65% and 13.43% respectively, while Uruguay, New Zealand and others combined for less than 14%, underscoring China's heavy reliance on Brazilian supply for beef imports.

Looking at the monthly import rhythm, beef imports in 2026 exhibited a pattern of "concentrated beef arrivals early in the year, followed by a mid-year correction and recovery". In January, China beef imports hit a phase peak, while February-May saw a sustained correction, operating within the 200,000-tonne range per months, with rebounding as overseas shipments arrived in June.

The concentrated arrivals in the first half significantly depleted Brazil's annual beef export quota to China, with only about 20% of the remaining quota now available. As a core source of low-cost supply for China's frozen beef market, any contraction in Brazilian low-cost supply will directly provide rigid support to imported beef landed costs.

From the global supply side, major overseas live cattle production regions are generally experiencing tight live cattle availability. Australia's beef export quota to China has been fully exhausted, and China domestic grain-fed beef supply now relies on Canadian and a limited volume of U.S. supplies for supplementation, with overall replenishment scale constrained. Argentina and Uruguay are similarly mired in tight live cattle inventory conditions, with constrained slaughtering schedules at the farming level and insufficient production capacity for large-scale replenishment of the Chinese market.

Meanwhile, Brazilian exporters have planned scheduled holiday shutdowns, and with the existing quota essentially depleted, there is virtually no possibility of price-cutting pressure on the domestic market.

However, from the domestic circulation side, the concentrated arrivals of large volumes of imported beef products in the first half have left traders with relatively high inventory, lengthening the market inventory digestion cycle and partially offsetting the bullish impact of tightening overseas supply.

From a cyclical perspective, over the long term, China's domestic beef industry has been undergoing capacity reduction since the second half of 2023. Following the breeding and fattening cycles of beef cattle, the supply gap resulting from earlier capacity contraction is expected to materialize gradually in the second half of this year.

However, in the near term, the second half coincides with the traditional peak slaughtering season for beef cattle, which will partially compensate for the long-cycle supply shortfall. The overall supply-demand gap is not expected to widen sharply in the near term.

In summary, the approaching depletion of Brazil's quota, combined with tight cattle supplies across multiple countries globally, will further solidify the floor for imported beef import costs and provide support for domestic spot prices. However, two persistent restraining factors, including traders' high beef inventories and seasonal increases in domestic slaughter volumes, continue to exert pressure, capping the magnitude and elasticity of beef price upside.

Looking ahead to the second half of the year, domestic beef market conditions are expected to maintain a firm range-bound pattern, with the prices steadily shifting modestly higher. Potential phased highs are most likely to occur during the late August to early September period and the November-December seasonal consumption peak windows, with no outright trend of significant price surges overall.