Mexico sees bigger Chinese demand for its beef on coronavirus concerns

By David Alire Garcia

MEXICO CITY (Reuters) - China's appetite for Mexican steaks and other cuts of beef is expected to increase more than 40% this year, in part due to disruptions caused by the coronavirus outbreak, according to Mexico's top cattle association.

Chinese buyers represent only about 4% of Mexico's foreign beef sales but the Asian market has been a steady source of growth, especially since most shipments inn the past have gone to just Hong Kong. More than 80% of total Mexican beef exports go to U.S. customers.

The spread of coronavirus has fanned concerns about domestic food security in China, amid widespread belief that the virus originated last year in a food market selling illegal wildlife in the city of Wuhan, the capital of China's Hubei province.

Authorities have locked down the province, within one of China's main food-producing hubs, in an effort to contain the epidemic. Travel restrictions have curbed the movement of animals and feed, and curtailed output at feed mills and slaughterhouses.

Rogelio Perez, the top trade official for Mexican cattle growers association AMEG, which forecasts future industry sales, estimated the sales resulting from the impact of the virus could amount to a third of the overall 40% sales growth.

Perez, in an interview late on Wednesday, said China's domestic beef producers have been especially hard hit by the disruption caused by the flu-like coronavirus, which has killed more than 500 people.

He said China's demand would benefit the two Mexican companies that have permits to export to China, SuKarne and Grupo Gusi. Forty-two other Mexican firms are awaiting approvals.

"It's a benefit for Mexico in the sense that this allows us to grow our exports faster," said Perez.

The lingering impact of African swine fever, which has reduced pork supplies and caused prices to spike, has also led to more consumers opting to eat more beef, he said.

China is by far the top beef importer, with imports in 2020 projected to be a record 2.9 million tonnes, nearly double 2018's total, according to U.S. Department of Agriculture data.

Last week, Brazil's two biggest meatpackers signalled the coronavirus outbreak could help boost Chinese demand for their products.

AMEG estimates the Asian giant bought some 250,000 tonnes of Mexican beef last year, worth around $40 million. Total Mexican beef exports in 2020 are projected at 390,000 tonnes, up 25.8% from 2018, according to USDA data.

(Editing by Drazen Jorgic, Gavin Maguire and Neil Fullick)