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Supply Chain

Brazil's JBS Says China Lockdowns Won't Affect Demand

Brazilian meat giant JBS SA played down the effects of COVID-19-related lockdowns in China, saying they would not affect demand for JBS products despite causing logistics concerns, according to management remarks.

During the first quarter, inventories rose in the United States because of logistics issues that also hampered US ports, increasing costs for that business unit, which is the company's biggest.

Still, China is seen as a long-term beef importer due to its low per capita consumption levels, JBS said.

First-Quarter Report

JBS posted a first-quarter profit that beat expectations in spite of higher global grain prices and lower pork exports to China, with the US beef and poultry business performing well.

Citi analysts reiterated a buy rating on the stock and increased their target price to 50 reais per share after the quarterly results.

Credit Suisse analysts said they remain positive on JBS’s investment case, as they believe "operating momentum will remain solid in the coming quarters."

However, Credit Suisse sees gradually declining cattle availability in the United States putting pressure on fat steer prices.

Barbecue Season

That should be offset by strong US demand for beef, specially as Americans kick off barbecue season, they said.

While sales grew by double-digit levels across all business units in the first quarter, JBS recognised a challenging scenario in Brazil, its home market.

In the South American nation, where the 12-month inflation rate stood at 12.1% through April, demand for beef is at historical lows due to high unemployment and an economic downturn.

Read More: JBS Sets Up Fertiliser Production In São Paulo

News by Reuters, edited by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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