Brazil’s beef packers halt production as cattle prices soar

Brazil’s beef packers halt production as cattle prices soar

Reuters – Brazilian beef packers are halting production in selected locations, as a rise in costs that cannot be passed through to consumer prices have squeezed their margins, sources and industry representatives told Reuters.

Multiple small, medium and large production facilities have gone through stoppages or remain idle as they adjust supply to demand, said Paulo Mustefaga, president of trade group Abrafigo, without providing additional details.

“The price of cattle has risen by about 60 per cent over a year and the industry was able to pass through 40 per cent of costs at best,” Mustefaga said. “The sector is having a hard time making ends meet.”

The 15-kilo arroba, a Brazilian benchmark for cattle prices, hit a historical high of 320 reais (C$70.53) in recent days, boosted by low animal supplies and heated demand for Brazilian beef exports, particularly from China.

Mustefaga said another factor forcing companies to reduce slaughtering is a fall in the purchasing power of Brazilian families, as the coronavirus pandemic slowed Brazil’s already lacklustre economic activity.

Brazil’s second-biggest beef processor Marfrig, which owns National Beef in the U.S., confirmed to Reuters that it sent employees on furlough at a unit in the town of Alegrete for 30 days. Slaughtering there resumed April 1.

The company also said it temporarily halted a plant in Rondonia state.

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