Brazilian Poultry’s Comeback: Agribusiness Stocks Poised for a Rebound

The recent bird flu outbreak in Brazil’s poultry-rich state of Rio Grande do Sul has been swiftly contained, unlocking a critical inflection point for the nation’s poultry industry. With export restrictions now being lifted or relaxed across key markets, companies like BRF (BRFS) and JBS (JBSS3) stand at the forefront of a recovery that could redefine global protein supply dynamics. For investors, this presents a compelling de-risking opportunity in agribusiness stocks—particularly for those undervalued after temporary disruptions.

Swift Containment Signals Resilience

The outbreak, confirmed on May 16, 2025, triggered immediate export bans from Brazil’s top markets, including China and the EU. Yet Brazil’s Ministry of Agriculture mobilized containment protocols with military precision. By isolating the affected 50-km zone around the outbreak site in Montenegro, Rio Grande do Sul, and leveraging its robust veterinary infrastructure, the government demonstrated its ability to limit the crisis to a localized area.

This containment strategy resonated with trade partners. Countries like Japan, Saudi Arabia, and the UAE swiftly adopted regional restrictions, rather than blanket bans, allowing imports from unaffected Brazilian states such as Paraná and Santa Catarina. China’s 60-day suspension, ending in mid-July 2025, further underscores the temporary nature of the disruption.

BRF and JBS: Leading the Rebound

The lifting of restrictions directly benefits BRF, Brazil’s largest poultry exporter, and JBS, the world’s largest protein processor. Both firms have already begun renegotiating export terms with China and the EU, capitalizing on their diversified production networks.

BRF’s Edge:
- Controls 35% of Brazil’s poultry exports, with a strong presence in China and the Middle East.
- Its vertically integrated model (from feed to processing) ensures supply chain resilience.
- Valuation multiples (P/E of 12x vs. 15x pre-outbreak) suggest undervaluation despite its dominant position.

JBS’s Advantage:
- Leverages its global scale, with poultry operations complementing its beef dominance.
- Benefits from regional diversification: 40% of its poultry exports originate from states unaffected by the outbreak.
- Trading at a 20% discount to pre-pandemic multiples, offering asymmetric upside.

Why Now is the Time to Act

1. Global Protein Shortages Create Tailwinds:
   The U.S. egg shortage, driven by its own bird flu crisis, has already boosted Brazilian egg exports to the U.S. by over 1,000% YTD 2025. This surge signals pent-up global demand that Brazilian producers are uniquely positioned to fill.

2. Regional De-Risking Opportunities:
   Investors have historically avoided agribusiness stocks amid fears of supply chain disruptions. However, Brazil’s containment success—and the limited scope of restrictions—now de-risks these investments. The regional approach adopted by importers ensures that only specific zones are impacted, not entire countries, minimizing long-term reputational damage.

3. Valuation Multipliers Are Mispriced:
   Both BRF and JBS trade at discounts to their peers, despite Brazil’s status as the world’s largest poultry exporter (14% of global supply). With export bans lifting and demand recovering, these valuations are primed for reversion.

Risks, but Manageable Ones

• New Outbreaks: Avian influenza remains a global risk, but Brazil’s proactive surveillance of wild birds and commercial farms mitigates this.
• Currency Volatility: A stronger real could pressure export competitiveness, though hedging strategies and long-term contracts provide buffers.

Conclusion: A Strategic Buying Opportunity

The bird flu crisis was a temporary setback, not a terminal threat. With export restrictions fading and global protein demand surging, BRF and JBS offer asymmetric upside for investors seeking exposure to a rebounding agribusiness sector. Their undervalued stocks, coupled with Brazil’s proven ability to manage supply chain risks, make them prime candidates for a buy now, hold long strategy.

The clock is ticking—act before the market catches up to the recovery.