Brazil's poultry glut to pressure JBS, MBRF margins, JPMorgan says
JBS•Exports remain firm, but margins could weaken
- JPMorgan said export margins remained healthy, supported by firm demand in the Middle East, Mexico and other South American markets, as well as continued Chinese demand for chicken feet.
- Still, it said international margins were expected to weaken from current levels because of a stronger currency, geopolitical tensions, higher freight costs, weaker shipments of deboned thigh meat to Japan and uncertainty over a potential European ban after September.
- Some producers told JPMorgan profitability could bottom out in the third quarter, with margins gradually recovering by the end of the year if supply begins to adjust.
Supply remains high while domestic demand stays weak
- JPMorgan said Brazil was still producing more chicken than the market needed, with farmers raising 2.3% more chicks this year than a year earlier and chicken slaughter up 2.5%.
- Some producers are sending lighter birds to market, which could be an early sign that supply is starting to adjust. But the bank said none of the producers planned to cut the number of chicks they raise because many are still in a strong financial position thanks to last year's solid profits.
- The bank added that domestic demand remained soft, with consumers under financial pressure, while lower beef and pork prices were also weighing on chicken demand.
JPMorgan sees margin pressure in Brazil's poultry market
Brazil's poultry glut is likely to pressure the margins of producers JBS Z98.F and MBRF MBRF3.SA in the second half of 2026, JPMorgan said in a note on Wednesday.
The bank said, after speaking with more than 10 small and mid-sized poultry producers and exporters, that all expect profitability to decline in the period mainly because poultry supply remains too high, consumer demand in Brazil is weak and beef and pork prices are falling.
