Marfrig's Home Beef Business Helps Cushion US Cattle Squeeze

Marfrig Global Foods reported an 11% YoY decline in operating earnings to 3 billion reais ($550 million) in Q2, but the impact of a US cattle shortage and Brazilian bird flu outbreak was cushioned by rising profits at its South American beef operation and booming demand for chicken. National Beef posted a $25 million profit, down from $90 million YoY, while BRF SA's net income fell 33% to 735 million reais.

Marfrig Global Foods SA reported an 11% year-over-year (YoY) decline in operating earnings to 3 billion reais ($550 million) in the second quarter of 2025, according to a statement released on July 2, 2025. The company's operating earnings fell short of analyst estimates by 1.12 billion reais, reflecting the impact of a severe cattle shortage in the US and a bird flu outbreak in Brazil [1].

Despite these challenges, Marfrig's South American beef operation demonstrated resilience, with rising profits helping to cushion the overall impact. The company's National Beef operation posted a profit of $25 million in the quarter, down from $90 million a year earlier. Meanwhile, BRF SA, Marfrig's chicken and processed-food company, saw net income fall 33% from a year earlier to 735 million reais.

The second-quarter results are the first since shareholders in both companies approved Marfrig's proposal to buy the BRF shares it doesn't already own. The deal is still pending antitrust approval [1].

Marfrig's CEO, Miguel Gularte, cited the impact of the bird flu outbreak on the company's exports, noting that major poultry buyers including China and Europe remain closed for Brazilian supplies. However, the company's focus on value-added, branded products in its South American beef operation has helped to mitigate the effects of the US cattle shortage and the bird flu outbreak [1].

JBS SA, a major competitor in the meat processing industry, has also been navigating the challenges posed by the US cattle cycle. The company's strategic diversification into chicken and global protein markets has served as a hedge against beef volatility, with its chicken segments demonstrating stable margins despite macroeconomic challenges [2].

In an era of global supply chain disruptions and cyclical commodity pressures, JBS's strategic diversification into chicken and global protein segments has emerged as a critical buffer against the volatility of its beef operations. The company's 2023 NYSE listing has expanded its capital access, aiming to fund $2 billion+ annual capex including cultured meat projects and sustainability initiatives [2].

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. However, investors must remain cautious, as the beef segment's recovery hinges on the timing of the cattle cycle and the company's historical ties to deforestation in the Amazon and Cerrado [2].

References:
[1] https://www.bloomberg.com/news/articles/2025-08-14/marfrig-s-home-beef-business-helps-cushion-us-cattle-squeeze
[2] https://www.ainvest.com/news/jbs-strategic-diversification-hedge-beef-volatility-catalyst-growth-2508/