Meatpackers face turning point as China beef quotas hit Brazil

World’s top beef exporter Brazil is set to lower production after its main buyer China placed quotas on imports, marking the latest hit to meat companies already dealing with the prospect of shrinking cattle supplies.

The imposition of a beef quota that’s smaller than what Brazil shipped in recent years to China will force meatpackers to trim output this year, according to banks and consultancy firms which are now cutting forecasts for the country’s production. Supplies that were already set to shrink on lower cattle availability should see an even steeper decline than previously expected.

The drop sets the stage for a more challenging year ahead for Brazil’s meat industry as well as for companies such as JBS NV, Minerva SA and MBRF Global Foods Company SA who hold large operations in the South American nation. The impact already is being seen with shares falling since China’s Dec. 31 announcement.

“It’s an important setback for the meat industry,” said Fernando Iglesias, an analyst at consultancy Safras & Mercado who estimates China’s restrictions will cause slaughter in Brazil to fall 3.6% this year compared to 2025.

A similar drop should be seen in total beef output, Iglesias said. Prior to China’s announcement — which effective Jan. 1 placed a 55% duty on shipments exceeding the quota — his forecast was of a 2.8% decline in slaughter.

In recent years, the Brazilian units of major meatpackers were aided by low costs of cattle and abundant overseas demand that pushed exports to a record in 2025. Now, cattle supplies are seen lowering as ranchers start rebuilding herds, which may increase costs for beef plants.

This comes as global consumers increasingly are feeling the impact of elevated beef prices. The Chinese quotas could reduce demand, potentially allowing for lower prices elsewhere. Still, a decline in Brazilian production, and the tighter cattle supplies, may limit price declines, especially as demand remains strong in many regions, including the US.

Another consideration is that high prices have led Brazil’s consumers to migrate to cheaper sources of protein, said Rabobank analyst Wagner Yanaguizawa.

“For the meat processing sector, they are seeing raw materials with a tendency to increase in price, and exports have been an alternative for large processors to try to offset the downward trend in consumption in the domestic market,” Yanaguizawa said.

Exports may now weaken, especially in the end of the year in case the quotas are fulfilled in the first three quarters, Yanaguizawa said. Rabobank is working on a new forecast for Brazil’s beef output, with a prior estimate of as much as a 6% annual decline likely to be revised lower.

Particularly concerning for Brazil is that the country relies heavily on the Chinese market, which accounts for over half of total beef shipments. Brazil has diversified shipments recently, but local beef plants still are not able to reach key markets that are served by competitors such as the US and Australia. Japan, for example, still hasn’t allowed imports of Brazilian beef based on sanitary issues, despite recent efforts from authorities to speed negotiations.

Chinese Demand

Not only the quota system limits the beef trade, but China’s consumption of beef also is slowing after decades of exponential growth. That’s as consumers reduce dining out and cut spending on premium food and drinks amid economic woes. Beef consumption in the Asian nation is set to drop about 2.5% in 2026 to 11.29 million tons, according to US Department of Agriculture.

China’s imports of beef from all regions also are weakening after local producers stepped up output under a government push to be more self-reliant with food. In the first 11 months of the year, China brought in 2.59 million tons of beef, slightly lower than levels for the same period a year earlier.

Since China’s announcement, Minerva shares have lost over 7%, more than other industry peers due to its largest exposure to the Brazilian market. JBS, which has a large percentage of revenues coming from other regions including the US, saw shares fall roughly 4% in the same period.

Other South American nations, including Argentina and Uruguay, were allocated quotas that are considered less restrictive, and more in line with the nations’ typical export volumes. For that reason, analysts at Itaú BBA said in a January report they expect some Brazilian beef to reach those neighboring countries, freeing up more local supplies to serve China. Still, they see Brazilian beef output falling 2% this year.

Shipping to other markets will also likely mean lower margins for the industry, as China typically pays higher prices for the types of meat cuts Brazil sells, analysts at bank BTG Pactual said in early January.