Cattle prices in Brazil have surged this year — and the rally is already triggering a response from major meatpackers.
JBS, the world’s largest meat producer, put workers at two beef plants in Mato Grosso on 20 days of collective leave starting Monday, people with knowledge of the matter told The AgriBiz. Meanwhile, MBRF, another major beef processor, placed workers from a specific shift on leave, another source said.
In Brazil’s meat industry, such furloughs are often used to cushion periods of sharp increases in cattle prices, which can erode margins.
Since January, fed cattle prices have climbed 15% in São Paulo, the country’s benchmark market, hitting a record 366.20 reais per arroba (15 kg) on Monday.
The rally reflects a race among beef processors to capture China’s 1.1 million-ton beef import quota destined for Brazil in 2026. Shipments exceeding the quota will face a 55% tariff, compared with 12% for volumes within the limit.
Brazilian exporters are likely to exhaust the quota by late June, according to Lygia Pimentel. “If current tariffs remain, we will see a shipping bottleneck in July, August, September and October. That’s our conservative estimate,” she said.
Market players and Abiec, a group representing beef exporters, have estimated the quota could be fully reached earlier, in the second half of May. After that, Brazil is expected to halt exports to China, as the 55% surcharge would render shipments economically unviable. Since China accounts for roughly half of Brazil’s beef exports, a sharp drop in trade flows would be hard to avoid.
Despite rising cattle costs, Brazilian beef remains highly competitive, which could help sustain shipments in the absence of China. Key consumer markets such as the U.S. are likely to increase imports to meet domestic demand.
“But no other market can replace China in terms of volume,” Pimentel said.
Not all meatpackers have access to the U.S. market. “Part of the Brazilian production that won’t go to China will be redirected. Another part won’t be absorbed. That’s when cattle prices will come under pressure due to margin compression,” an industry source said.
Negative Margins
In domestic sales, Brazilian meatpackers are already operating with negative margins. According to Maurício de Palma Nogueira, founder of Athenagro consultancy firm, the spread between boneless beef prices and fed cattle prices is among the lowest levels ever recorded in São Paulo state.
China remains the most profitable market for Brazilian meatpackers, followed by the U.S. and Europe. While forequarter beef cuts have been sold to China at around $7,000 per ton, the same cuts fetch about $6,000 per ton in the U.S. Average export price to other markets nears $5,600 a ton.
Not coincidentally, the JBS plants that have implemented mandatory leave are not approved to export to China. Companies are clearly prioritizing the Chinese market at a time of high raw material costs.
Feedlots on Alert
Feedlot operators face higher risks as they move through a period of weaker Chinese demand. Supplies of feedlot cattle ready for slaughter are set to rise between July and November — just as China is expected to step back from the market.
“There is significant risk for feedlots. We are advising our clients to hedge cattle prices,” Pimentel said.
From November, however, Chinese demand is expected to rebound, as shipments made then would arrive the Asian nation in January and count toward the 2027 quota. At that point, cattle prices are likely to resume their upward trend.
Another factor supporting prices is Brazil’s cattle cycle. The liquidation of female cattle is nearing an end, according to Pimentel, already tightening calf supply, with prices at record levels.
She expects the trend to persist through this year and next, with cattle prices peaking in 2028.
