Mad cow: Minerva sees disease overcome in Brazil soon – 02/24/2023 – Market

Minerva sees some short-term problems with the mad cow case in Brazil, which resulted in an embargo on Brazilian beef exports to China. However, he considers that the scenario for the company is positive in the coming quarters, with an expectation of up to 15% in volumes in 2023. The statement is from Edison Ticle, the company’s financial director, this Friday (24).

“Even if in the short term there is a problem in Brazil due to the atypical case of BSE [siga em inglês para Encefalopatia Espongiforme Bovina]if you look at the horizon of two to three quarters, the situation is very positive”, he said during the presentation of quarterly results.

According to Ticle, this positive scenario is due to the restriction in the supply of beef in the United States, while in Brazil the availability of animals ready for slaughter is greater for the 2023/24 biennium, with a new livestock cycle.

“Even with the restriction of Brazil [para exportar à China]I want to remind you that the diversified ‘footprint’ allows us to serve China through operations in other countries such as Argentina and Uruguay”, he said, reiterating the company’s strategy to minimize the sanitary problem that afflicts the sector.

Minerva recorded a net loss of BRL 25.7 million in the fourth quarter of 2022, amid a slowdown in prices and volumes in the Chinese market, which impacted the period, especially in October and November. Now the company sees the resumption process in China gaining strength week by week after the end of restrictive measures related to the pandemic.

The company, the largest exporter of beef in South America, with a 20% market share, obtained around 50% of export revenues in Asia in 2022, with China accounting for 43% of the total, according to a presentation this Friday.

Considering the size of China for the company, the executive admitted the impact on revenues and margins due to the health problem in Brazil, but also said that there is a positive effect on prices with the country’s momentary absence from the Chinese market, something that can be captured especially for the company’s three Uruguayan operations, in addition to Argentina.

Looking at the global scenario, with the resumption of greater demand from China and the drop in the supply of beef from the United States, estimated at 10% by the US government, the Minerva executive sees good opportunities for the company, especially after the resolution of the consequences of the health problem in the largest global exporter of beef.

He said that there is a possibility that the company will increase its volumes between 10% and 15% this year, and considers that prices in general will remain firm, “flats” (stable) in a “conservative” scenario.

The problems that affected the company in the fourth quarter, including lower slaughter in Mercosur regions, were temporary and should be overcome throughout the year, according to him.

REOPENING OF CHINA

Also participating in the teleconference, the company’s CEO, Fernando Queiroz, said he expected the result of the countertest from a reference laboratory in Canada to come next week, which should confirm that the case of mad cow in Pará is atypical, that is, it occurred spontaneously in an older animal, without risk to the production chain and consumers.

From then on, it would be easier for China to reopen purchases from Brazil, which has a “self-embargo” protocol with citizens when there are sanitary occurrences of the kind.

Queiroz said he does not expect a major impact on exports from the embargo, especially considering that the Brazilian government is prioritizing the issue, which should be discussed by President Luiz Inácio Lula da Silva with his Chinese counterpart, Xi Jinping, on the Brazilian’s trip to China at the end of the next month.

Queiroz also cited good prospects for opening up Mexico to Brazilian meat, citing information published in the press.