3 March 2022

According to analysis from corporate investment bank Itaú BBA, the ongoing crisis in Ukraine could have consequences for the Brazilian meat industry and global meat supply.

Brazil is a net exporter of corn and, as Ukraine provides 35% of the corn supply for China as of 2021, any disruption to this supply could have significant implications for cereal prices in Brazil, the bank said.

According to its analysis, every 10% increase in corn prices results in a 2% rise in unit cost of production for food processor BRF, which would spill over into Marfrig, which currently has a 33% stake in the company.

Ukraine and Russia are both net exporters of chicken meat, and any disruptions could also shift this demand to Brazil. BRF would reportedly benefit from a subsequent rise in product prices.

However, the bank reports that beef should remain stable and that companies such as JBS will see pressure in the chicken and pork segments but will be less affected in beef, as that sector sees less fluctuation in the U.S. and Brazil with changing grain prices.

Minerva would also suffer limited impacts, Itaú BBA reports, and that high global demand for beef means that meatpackers will be able to easily redirect sales to other markets if the situation in Eastern Europe continues or worsens.

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