Feathers to Fortune: Why Brazilian Poultry’s Recovery is a Buy Signal for 2025

The global poultry market is at a crossroads. While the U.S. poultry sector grapples with its third year of crippling bird flu outbreaks, Brazil—the world’s largest poultry exporter, controlling 35% of global trade—faces a critical test. A recent outbreak in Rio Grande do Sul, its third-largest poultry-producing state, triggered immediate trade bans from China, the EU, and others. Yet this crisis could catalyze a strategic rebalancing of global trade flows, creating a rare buying opportunity for investors in Brazilian producers like BRF (BRFS) and JBS (JBSS3). Here’s why:

The Outbreak’s Silver Lining: Regionalized Bans, Not Total Collapse

Brazil’s May 16 bird flu outbreak initially sent shockwaves through global markets. China, Brazil’s top poultry buyer (accounting for over half its exports), imposed a 60-day nationwide ban. The EU, Mexico, and Argentina followed suit. Yet this is a temporary setback, not a terminal blow. Key buyers like Japan, Saudi Arabia, and the UAE have already signaled willingness to accept regionalized trade bans—a critical distinction. By limiting restrictions to Rio Grande do Sul, Brazil’s poultry exports from unaffected states could resume sooner than feared.

This nuanced approach reflects the industry’s lobbying success. Brazil’s government has been quick to share data with trade partners, emphasizing that the outbreak remains localized. If containment efforts succeed, the 10–20% export rebound potential cited by S&P Global analysts becomes achievable.

Why China’s Dependency is a Lifeline for Brazilian Producers

China’s poultry market is uniquely vulnerable. The U.S. poultry sector, hamstrung by its own bird flu outbreaks since 2022, faces a dual problem: Beijing’s refusal to lift bans on 40+ states (despite a 2020 Phase 1 Agreement) and logistical bottlenecks. Brazil, by contrast, is China’s top supplier. A prolonged ban on Brazilian poultry would force Beijing to turn to pricier alternatives like U.S. producers—unless Lula’s diplomacy can fast-track regionalized access.

Brazil’s President Lula da Silva and China’s Xi Jinping have already prioritized trade talks, with poultry exports likely high on the agenda. Brazil’s 15% poultry output in Rio Grande do Sul pales compared to its total 35% global market share. A compromise here could see China easing restrictions faster than the U.S. has managed, giving Brazilian producers an edge.

The U.S. Supply Gap Creates a Strategic Window

The U.S. poultry industry’s struggles are a double-edged sword for Brazil. While U.S. egg exports to Brazil surged 1,000% in early 2025 due to its own outbreaks, Brazil’s recovery could reclaim that lost ground. The Phase 1 Agreement’s “regionalization” clause—requiring China to lift bans 90 days after states are cleared—favors Brazil’s ability to carve out exemptions.

Meanwhile, U.S. producers face a losing battle. China’s refusal to honor the 2020 deal (extending bans beyond stipulated terms) creates an opening for Brazil to dominate the market gap. Investors in BRF and JBS stand to benefit as global buyers pivot to a supplier with proven scalability and a track record of food safety.

Risks: Containment Failures and Geopolitical Volatility

This is not a risk-free bet. A spread of the outbreak beyond Rio Grande do Sul would trigger broader bans, eroding Brazil’s credibility. Investors must monitor containment efforts closely, including the 10-km radius culling zone and the culling of 17,000 birds so far.

Additionally, geopolitical tensions could disrupt diplomacy. If U.S.-China trade talks heat up, Beijing might weaponize poultry bans to pressure Washington—though Brazil’s lower political risk makes it a safer bet.

The Bottom Line: A Strategic Buy with 20% Upside

The math is compelling. Brazil’s poultry sector trades at depressed valuations due to the recent ban, yet its 35% global dominance and China’s dependency create a floor. A 10–20% rebound in exports post-ban—paired with rising global protein demand—could unlock outsized gains for BRF and JBS.

Investors should take long positions now, using the current dip as an entry point. The stars are aligning: Lula-Xi diplomacy, regionalized trade logic, and the U.S.’s supply constraints all favor a Brazilian comeback. The only question is whether to buy now—or regret missing the flock.

Final note: Monitor Brazil’s outbreak containment metrics weekly. If the virus remains localized, this is a buy-and-hold play. If it spreads, exit swiftly.