Brazil’s Minerva project South America to command 50% of beef exports in 5 years

Minerva, the largest South American beef exporter, anticipates that South America will increase its share in global beef shipments to 50% worldwide in five years, a ten-percentage-point rise from the current participation, estimated the company’s CEO, Fernando Queiroz, on the 28th.

The company, which recently announced the acquisition of assets from the competitor Marfrig in South America, solidifying its presence in the region, relies on the competitiveness of pasture-raised cattle, predominant in South American countries, along with the provision of labor at lower costs compared to countries like the United States.

“The sector is increasingly moving to more competitive areas; it is much cheaper in South America, a significant differential, besides the aspect of nature,” said Queiroz during the opening of Minerva Day, aimed at investors.

“Fifty percent of global trading will be in our hands within five years,” he added.

The company currently holds about 20% of South American exports and aims to increase its share to about a third in five years, fueled by the acquisitions of Marfrig’s assets.

In August, Minerva announced a 7.5 billion reais deal to buy specific beef and lamb slaughter units from the industry giant Marfrig in Brazil, Argentina, Chile, and Uruguay.

The agreement is expected to strengthen Minerva in South America, expanding the slaughter capacity by about 44% to over 42,000 head/day, as previously reported by the company.

Executives expect the deal to be approved in the first half of 2024.

After that, the company will focus on consolidating the acquired assets, said Queiroz, when asked if the company might consider new acquisitions.

“We estimate at least two to three years extracting synergies, deleveraging the company, returning to paying dividends,” he commented.

The executive said the company has made 20 acquisitions in the last 15 years, aiming to be a significant player in the main beef production platforms, such as Brazil, Argentina, Uruguay, and Paraguay.

“We have the best global platform to mitigate risks, with the U.S. facing a production decline,” said the CEO, noting that Americans are in a low-supply cycle after a strong female cattle slaughter movement, which raises costs in North America.

Queiroz also highlighted that Minerva’s acquisitions over the years demonstrated the company’s ability to extract synergies from businesses, which is expected to happen with the assets acquired from Marfrig.

The chart below shows the volume of beef exports from Brazil between Jan 2019 and Sep 2023. The data is from DataLiner.

Beef exports from Brazil | Jan 2019 – Sep 2023 | WTMT

Source: DataLiner (click here to request a demo)

CHINA

Minerva executives believe beef export prices to China, the largest importer, should improve next year after experiencing significant declines in 2023 compared to 2022.

This improvement is associated, among other factors, with a reversal of the livestock cycle in China, resulting in lower supply in the Asian country, where consumption remains strong among the younger population.

Asked whether the low pork prices in the Chinese market could affect beef cut costs, Minerva representatives said this relationship does not exist in the Asian country, as in other markets.

Source: Notícias Agrícolas

Click here to read the original article in Portuguese: https://www.noticiasagricolas.com.br/noticias/boi/364789-minerva-projeta-que-america-do-sul-tenha-50-da-exportacao-de-carne-bovina-em-5-anos.html

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