Minerva to supply beef to China despite Brazil export ban
A self-imposed sanitary agreement was signed in 2015
23 February 2023
2 minute read
By: Brazilian meatpacker Minerva SA said on Thursday it will keep meeting Chinese demand for beef despite a self imposed ban of Brazilian exports due to a case of mad cow disease confirmed in the country, which is China's No.1 beef supplier, reported Reuters.
Minerva said in a securities filing it does not expect the temporary halting of exports from Brazil to affect its business, noting it will supply the Asian country with beef from three plants it operates in Uruguay and one plant in Argentina.
The self-imposed ban was triggered by a sanitary agreement signed between Brazil and China in 2015.
Of the listed meat companies affected by it, Minerva should be the most affected followed by rivals Marfrig and JBS, according to Santander analysts.
"China and Brazil are heavily dependent on each other for beef trade, but China could use mad cow disease to bargain for low prices," Santander wrote in a note to clients.
In spite of companies' ability to supply China from its other plants outside of Brazil, the ban will weigh on meatpackers' 1H23 results and the stock price.
According to Santander, Minerva has the highest relative exposure to Brazil, with 36% of its 12-month revenues originated in Brazil compared with 30% for rival Marfrig in South America and 15% for JBS in Brazil.
"JBS should be the least impacted due to its geographic and protein diversification," Santander said.
The confirmation of a case of Bovine Spongiform Encephalopathy was in a 9-year-old male animal in the country's northern Para state. Tests are pending to determine if this is an atypical case that affects older animals or classic case.
Agriculture Minister Carlos Favaro said he hopes the trade ban can be lifted next month.
