Slaughterhouses lost BRL 40 billion on the Exchange and aim for export – 06/11/2023 – Panel SA

Until June, JBS, Marfrig and Minerva lost together R$ 40 billion in market value. In June 2022, they were worth BRL 91.4 billion.

JBS shares fell by 46% and the company is now worth R$39.3 billion. It only lost to Marfrig (a drop of 50.5%. In the period, Minerva’s shares fell less (16.25%).

With the price of beef on the rise, domestic sales retracted and the output was exports. Not even the growth in pork consumption – which already represents 9% of consumption, according to research by Kantar, has changed the preference for the foreign market.

The three companies lost domestic sales of beef and began to focus their efforts on exports, relying largely on the government’s help in conquering new markets.

Projections by the Ministry of Agriculture indicate that, if the current pace is maintained, the country should end the year with the all-time record for meat exports.

skinny cows

On the domestic market, the situation is not good. Beef consumption dropped 4% in the first quarter of this year compared to the same period in 2022, according to Kantar research.

The institute showed that the high price is maintaining the downward trend in the domestic market, making President Lula’s dream of guaranteeing the return of the picanha barbecue on Brazilians’ weekends increasingly distant.

The participation of red meat in consumption was 43.1% in the first quarter of 2021, and increased to 39.3% in the same period last year.

Brazilians replace red meat with chicken —which already accounts for 29% of consumption, according to Kantar— and pork, which now represents 9.1% compared to 4.6%, in June 2021.

From a financial point of view, this led to a drop in the profitability of companies, which had to bear the increase in costs. They were forced to hold back the reproduction of cattle, creating a restriction on supply. Result: increase in local prices.

For Vinicius Steniski, an equity analyst at TC Investimentos, the way out for Marfrig, Minerva and JBS was to balance the supply problem in Brazil by exporting more meat.

In other countries, particularly China and the USA, contrary to the Brazilian scenario, the cattle cycle was favorable.

“While here in Brazil there was a limited supply, China was buying a lot of beef, at a higher price than the domestic market. This, in a way, helped to improve the results of the companies”, says Steniski.

This scenario, however, is starting to change. Despite the high price in supermarkets, which still scare away consumers, beef inflation shows signs of falling. The main driver behind the truce is the greater supply available in 2023 domestically.

From January to April, meat prices recorded four consecutive monthly lows in the IPCA (Broad National Consumer Price Index). The biggest fall was in February (-1.22%), and the smallest, in April (-0.45%).

With Diego Felix

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