Reuters – A decline in Brazilian cattle prices this year and strong demand for the country’s beef exports will widen Brazilian meatpackers’ margins in the short term, according to analysts, though weakness in the domestic market could undercut those gains.
Live cattle prices on the Sao Paulo market are on a downward trajectory, with the “arroba” – a standard 15-kilo measure used as a benchmark – trading at an average of US$52.87, a significant discount compared to the first quarter, according to Scot Consultoria, an agribusiness consultancy.
“The margins of slaughterhouses that export has improved,” said Alcides Torres, director of Scot Consultoria. He added that converting bigger margins into profits would vary from company to company.
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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 with higher numbers of cattle coming to market as well as more aggressive negotiating stances adopted by foreign buyers, especially China.
