May 16, 2022

 

JBS says COVID-19 lockdowns in China will not affect meat demand

 

 

Major Brazilian meatpacker JBS SA said COVID-19 related lockdowns in China will not affect demand for JBS meat products in the country, despite the lockdowns resulting in logistics issues, Reuters reported.

 

JBS said China is seen as a long-term importer of beef because of its low per capita consumption levels.

 

JBS announced higher than expected first quarter profits even though global grain prices are soaring and declining pork exports to China, with its US beef and poultry units performing positively.

 

In early trading in So Paulo, the company's shares jumped 1.7%, but eventually lost virtually all of their gains, closing at BRL 35.76 (~US$7.07; BRL 1 = US$0.20)

 

After the quarterly results, Citi analysts maintained a buy recommendation on the company and raised their target price to BRL 50 (~US$9.88) per share.

 

Analysts at Credit Suisse remain optimistic about JBS's investment thesis, believing that operating momentum for the company will remain good in the coming quarters.

 

Credit Suisse, on the other hand, believes that decreasing cattle supply in the US is exerting downward pressure on fat steer pricing.

 

They believe that this will be compensated by high beef demand in the US particularly as the barbeque season approaches.

 

While sales increased by double digits across the board in the first quarter, JBS acknowledged a difficult situation in Brazil, its home market.

 

Due to rising unemployment and an economic slowdown in the South American country, where the 12-month inflation rate was 12.1% in April, demand for beef is at historic lows.

 

-      Reuters