Mad cow in Brazil: Marfrig will use units abroad – 02/23/2023 – Market

The giants Minerva and Marfrig said this Thursday (23) that they will continue to meet the Chinese demand for beef through slaughter units in Uruguay and Argentina, after a “self-embargo” by Brazil due to a case of “cow disease”. crazy” in Pará.

According to Minerva, this strategy will prevent its market share from being affected, since the Brazilian units that previously shipped meat to the Chinese are now suspended. Three Uruguayan and one Argentinian plants will be used.

Minerva, leader in South America in the export of beef, commented that the suspension was due to the confirmation of a case of Bovine Spongiform Encephalopathy in a nine-year-old animal, as reported by authorities the day before.

Minerva’s shares, which fell 2.7% in the trading session, were up 3.25% at around 5:10 pm. Marfrig’s, in turn, were up 0.64%.

Marfrig, which is the largest global producer of hamburgers, said in a statement that the service carried out by the company’s seven Brazilian plants will be redirected to the six units qualified for the Chinese, located in Uruguay and Argentina.

“Marfrig believes that the situation of the EEB is within the regular parameters involving health issues and expects that exports will resume soon,” he said.

The company also pointed out that recent qualifications received by the company will also contribute to the diversification of protein export destinations in Brazil.

In the last 12 reported months, Marfrig’s Brazilian exports to the Chinese market accounted for 6.4% of its consolidated net revenue.

CRAZY COW

Brazil and China, the largest importer of the Brazilian product, have a business suspension protocol for cases of atypical BSE, something that has already happened in the past.

Samples from the animal were sent to a reference laboratory in Alberta, Canada, “which will be able to confirm whether the case is atypical”, when the disease occurs spontaneously in older animals, without presenting risks to the food chain.

“It is important to point out that since 2015 the World Organization for Animal Health (OIE) excludes the occurrence of cases of atypical BSE for the purpose of recognizing the country’s official risk status”, said Minerva.

As a result, the company said it believes that, “as in previous periods, the suspension of Brazilian exports is temporary and should be resumed in a short period of time”.

In a note, Safra Corretora told customers that the “probability of being an atypical variant without contagion is high”, but that the “resumption of shipments to China is now at the discretion of the eastern country”.

“Today we have a scenario of falling beef prices, and with the reopening of the economy we see that China should not be able to stay without the Brazilian product for so long,” he said.

Safra Corretora, as well as other analysts, said that “Minerva is the most affected”, since 30% of its revenue is linked to exports to the country.

JBS has around 3% of its revenue linked to China, and BRF, zero.

“If we assume that the embargo takes two or three months, the impact for Minerva would be more negative ‘through newsflow’ than effectively on the bottom line”.

Guide Investimentos recalled that the Asian country is currently Brazil’s largest beef import partner, accounting for more than 50% of shipments last year.

“The Chinese government must evaluate the information provided by the responsible bodies here in Brazil before effecting the release of shipments again,” said Guide.

Analysts at Santander bank said they believed China would use the case to bargain for lower meat prices.

Reuters reported the day before that the market for live cattle “frozen” and left slaughterhouses in Brazil on hold, with slaughter suspended in several regions of the country, especially those that sell meat to China.