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MarketScreener Homepage  >  Equities  >  Bolsa de Valores de Sao Paulo  >  BRF S.A.    BRFS3   BRBRFSACNOR8


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Brazil's BRF, JBS grapple with higher feed costs, lower export premiums in Q3

11/06/2020 | 03:33pm EST

SAO PAULO, Nov 6 (Reuters) - Higher grain costs are seen weighing on protein processors like BRF SA and JBS SA when they report third quarter results next week even as export markets stayed strong in the three-month period.

While China remained a key export destination buying ever-larger meat volumes from Brazil and other origins, it is now paying lower premiums, according to a Nov. 2 report from HSBC analyst Alessia Apostolatos.

"The weaker Brazilian real is a double-edged sword that has made Brazilian protein exports more competitive globally, but also increased input costs," Apostolatos said. "China has been able to negotiate lower prices and absorb higher quantities as it continues to face African swine fever (ASF) pressures."

Chicago soy futures hit a four-year high this week as dry weather spurred supply concerns in top producer Brazil. Corn, another key livestock feed ingredient, soared 46% in local currency over the third quarter.

But the impact of higher input costs is different for JBS and BRF, given their distinct product portfolios and production base, Banco do Brasil analyst Luciana Carvalho said in an interview on Friday.

In the United States, where JBS gets 70% of its sales, the impact on third-quarter margins from higher grain costs was probably less significant because of still ample cattle availability, Carvalho said.

For BRF, which is focused on chicken and pork, higher feed prices could be more of an issue though the company's corn inventories, typically lasting three or four months, provide a cushion, she added.

Higher costs in Brazil compelled meatpackers to shift toward higher-margin exports and processed foods that sell for more. As such, both JBS and BRF benefited from the Brazilian government's cash aid program during the pandemic, which allowed families to spend the extra income on food.

On a less positive note, BRF still faces import restrictions imposed by Saudi Arabia, weighing on Halal food sales in the Middle East. For JBS, tight cattle availability in Australia and Chinese export restrictions are key issues, Carvalho said.

At the same time, strong demand for pork on domestic and international markets, especially from China, should offset higher feed costs and protect margins in Brazil's hog processing industry going forward, Carvalho said.

In October, all Brazilian meat companies underperformed the benchmark Bovespa index as record cattle, corn and soy prices boost overhead.

BRF reports quarterly earnings on Nov. 9 while JBS reports on Nov. 11. (Reporting by Ana Mano Editing by Marguerita Choy)

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
BANCO DO BRASIL S.A. -1.01% 34.18 End-of-day quote.-11.91%
BRF S.A. -1.76% 20.05 End-of-day quote.-9.03%
CORN FUTURES (C) - CBR (FLOOR)/C1 0.43% 524.25 End-of-day quote.8.32%
EURO / BRAZILIAN REAL (EUR/BRL) 1.39% 6.5989 Delayed Quote.1.03%
FEEDER CATTLE?FUTURES (GF) - CMG (ELECTRONIC)/C1 -0.20% 135.6 End-of-day quote.-2.63%
IBOVESPA -1.84% 116264.03 Delayed Quote.0.53%
JBS SA -1.13% 24.47 End-of-day quote.3.64%
LIVE CATTLE (LE) - CMG (ELECTRONIC)/C1 0.18% 114.3 End-of-day quote.0.35%
US DOLLAR / BRAZILIAN REAL (USD/BRL) 1.55% 5.4267 Delayed Quote.1.88%
All news about BRF S.A.
01/18BRF S A : Announcement to the Market – Joody Al Sharqiya Food Production F..
01/14BRF S A : SEC Filing (6-K/a) - Current Report by Foreign Issuer (Amendment)
01/06BRF S A : Notice to Shareholders - AGM Date
01/06BRF S A : Transparency Manual
01/04JBS : China suspends imports from Brazil pork plant over coronavirus concerns
2020BRF S A : SEC Filing (6-K) - Current Report by Foreign Issuer
2020BRF S A : Minutes of The Extraordinary Board of Directors Meeting
2020BRF S A : Announcement to the Market – Sale of Material Equity Interest &n..
2020BRF S A : Minutes of The Ordinary Board of Directors Meeting
2020BRF S A : Comunicado ao Mercado - Alienação ativos da Banvit na Romênia
More news
Sales 2020 38 424 M 7 153 M 7 153 M
Net income 2020 734 M 137 M 137 M
Net Debt 2020 15 446 M 2 875 M 2 875 M
P/E ratio 2020 18,2x
Yield 2020 0,96%
Capitalization 16 195 M 3 004 M 3 015 M
EV / Sales 2020 0,82x
EV / Sales 2021 0,76x
Nbr of Employees 90 000
Free-Float 99,4%
Chart BRF S.A.
Duration : Period :
BRF S.A. Technical Analysis Chart | BRFS3 | BRBRFSACNOR8 | MarketScreener
Technical analysis trends BRF S.A.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 11
Average target price 26,23 BRL
Last Close Price 20,05 BRL
Spread / Highest target 69,6%
Spread / Average Target 30,8%
Spread / Lowest Target -5,24%
EPS Revisions
Managers and Directors
Lorival Nogueira Luz Global Chief Executive Officer
Pedro Pullen Parente Chairman
Vinícius Guimarães Barbosa Vice President-Operations & Procurement Officer
Carlos Alberto Bezerra de Moura Chief Financial Officer & Vice President-Finance
Neil Hamilton dos Guimarães Peixoto Vice President-Research & Development
Sector and Competitors
1st jan.Capitalization (M$)
BRF S.A.-9.03%3 004
TYSON FOODS, INC.2.27%24 041
JBS SA3.64%11 909