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Poster in Oct 26, 2022 01:27:57

Analysts say lower beef prices are a way to fatten Brazilian meatpackers' margins

Analysts say lower beef prices are a way to fatten Brazilian meatpackers' margins

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Falling Brazilian cattle prices this year and strong demand for the country's beef exports will widen margins for Brazilian meatpackers in the short term, according to analysts, although weakness in the domestic market could dampen those gains.

Live cattle prices edged lower in the Sao Paulo market, where the "auroba" - a 15-kilo measure used as a benchmark - traded at an average of 278.79 reais ($52.87) late last week, a significant discount from the first quarter's 332.23 reais, according to Scott Consultoria, an Agribusiness Consultant.

“The margins of slaughterhouses that export has improved,” said Alcides Torres, director of Scot Consultoria. He added that converting these bigger margins into profits would vary from company to company.

Brazil is home to some of the world’s biggest meatpackers, including JBS SA, Marfrig, and Minerva SA.


Beef prices in Brazil have been dropping on the back of a higher number of cattle coming to market as well as the more aggressive negotiating stances adopted by foreign buyers, especially China.

A weaker yuan currency has pushed China, which accounted for almost 53% of Brazilian beef purchases in September, to press for discounts from sellers in the South American nation, Safras & Mercado analyst Fernando Iglesias said.

About 30% of Brazil’s beef production is sent abroad, with the rest consumed at home. But high inflation in the country has cut into consumers’ purchasing power, weakening domestic demand for beef and pushing companies to look to export markets.

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Source:
Online/SZK

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