JBS Forecasts US Cattle Cycle Improvement from Late 2027

JBS expects the US cattle cycle to improve from late 2027, driven by increasing demand for beef. Pilgrim's Pride Corporation is primarily engaged in the production, processing, marketing, and distribution of fresh, frozen, and value-added chicken and pork products.

JBS SA, the world's largest meat processor, has been navigating the volatile beef market by strategically diversifying into chicken and global protein segments. This diversification, coupled with its recent NYSE listing, positions the company as a resilient player in the global protein industry. As the U.S. cattle cycle is expected to improve from late 2027, driven by increasing demand for beef, JBS's strategic pivot to chicken and global protein segments offers a hedge against potential volatility in the beef market.

JBS's chicken and global protein segments have shown remarkable resilience. Pilgrim's Pride Corporation, a subsidiary of JBS, reported a 9.7% revenue surge in Q4 2023, driven by normalized grain prices and improved supply-demand dynamics. The company's regional EBITDA margins—5.3% in the U.S., 6.1% in the U.K., and 8.7% in Mexico—highlight the segment's ability to generate stable returns even amid macroeconomic headwinds. These margins were achieved through strategic operational efficiencies, such as automation and yield optimization, which position chicken as a long-term hedge against beef's cyclical volatility.

The NYSE listing, which occurred in June 2023, has expanded JBS's access to a global investor base, including U.S. institutional and retail investors. This move aligns with JBS's global footprint and is expected to reduce its cost of capital by 30–50 basis points. The listing also strengthens JBS's ability to fund its $2 billion+ annual capex program, which includes investments in cultured meat and sustainability initiatives. For example, the company's first cultured meat plant in Spain and R&D center in Brazil are positioned to future-proof its protein portfolio against shifting consumer preferences.

However, investors must remain cautious. The beef segment's recovery hinges on the timing of the cattle cycle, which is notoriously difficult to predict. Additionally, the NYSE listing has drawn scrutiny from environmental groups due to JBS's historical ties to deforestation in the Amazon and Cerrado. However, the company's recent sustainability investments, including reduced emissions intensity and partnerships with NGOs, suggest a gradual shift toward responsible sourcing.

JBS's strategic pivot to chicken and global protein segments, coupled with its NYSE listing, creates a compelling long-term investment case. The chicken business's stable margins and growth potential offset beef's cyclical risks, while the NYSE listing provides a capital-efficient platform for expansion. For investors seeking exposure to the global protein sector, JBS offers a diversified, operationally disciplined player with a clear path to margin recovery and innovation-driven growth.

References:
[1] https://www.ainvest.com/news/jbs-strategic-diversification-hedge-beef-volatility-catalyst-growth-2508/