The farmgate price of beef is falling in Brazil whilst export demand remains strong, leaving opportunity for increased margin for beef factories.

Typically around a third of Brazilian beef is exported, but Brazilian consumers are suffering rocketing inflation which is reducing their buying power. This in turn is weakening demand for beef so meat packers are turning to the export market.

Live cattle prices on the Sao Paulo market are on a downward trend. In Brazil they benchmark the market using an 'arroba', which is a standard measure of 15kg of meat. Last week it was trading at 278.79 reais (£45.25 ), which is well down on the price of 332.23 reais (£54) earlier in the year.

Scot Consultoria, an agribusiness consultancy, told local newspapers that strong global prices meant turning to exports, which meant margins of slaughterhouses have improved. In September, Brazil broke its month record with 231,400 tonnes of beef protein sent abroad.

A weaker Yuan currency has pushed China, which accounted for almost 53% of Brazilian beef purchases in September, to press for discounts from sellers. According to government data, Brazil’s beef exports in October have already surpassed those from the same month in 2021.

Companies like Minerva, JBS, and Marfirig should be able to translate such strong performance into positive figures in their balance sheets, despite the latter two facing a more adverse scenario in the United States. Minerva an export focused company is likely to be the biggest beneficiary.

US Government data show that the value of a ton of fresh beef exported by Brazil until the second week of October was US$5,931, up from US$5166 a year earlier, but below the US$6132 recorded in August this year, for example.