A new trend is taking shape in the global protein sector: demand for Brazilian meat processors has become structurally strong, to the point where nations are building strategic stockpiles amid a more fragile and volatile geopolitical backdrop. This week, at an investor event hosted by Bradesco, executives from JBS, Minerva and MBRF highlighted the resilience of meat consumption even in the face of wars and supply chain disruptions.
But strong demand does not always translate into extraordinary returns. It is a counterintuitive thesis, yet one that is gaining traction among sector analysts. Recent data helps challenge the more optimistic narrative. In Brazil, export volumes and prices continue to rise — beef shipments increased by roughly 20% year-on-year in the first quarter. Still, spreads have failed to follow.
In beef, margins declined by about 6% in the quarter, pressured by higher cattle costs, while export spreads weakened both sequentially and year-on-year. In pork, prices have fallen by around 25% over the past year, signaling a turn in the cycle and a sharp compression in margins. In poultry, profitability has improved mainly due to lower costs — with feed prices down double digits — rather than stronger pricing, underscoring the sector’s dependence on external factors.
The thesis — strong demand alongside falling margins — runs against consensus, but reflects a familiar economic pattern. As economist Hans Singer observed in the 1950s, exporting more commodities does not necessarily lead to greater value capture over time. Food security reinforces this dynamic: it boosts demand, but also encourages supply expansion, stockpiling and greater state intervention. Countries aim to secure supply, not maximize producer margins.
This creates an environment where volumes grow but returns remain constrained. As food security climbs the geopolitical agenda, protein risks shifting from a commodity into something closer to a utility — essential, yet structurally limited in its ability to generate attractive returns.
Still, a new element is beginning to emerge. Brazil is starting to exert some degree of pricing power in global markets, supported by scale, competitiveness and its ability to quickly redirect export flows in response to shocks — alongside rising dollar-denominated prices across proteins, even amid increasing supply. Yet this power remains incomplete: it allows producers to sustain prices and pass through part of their costs — such as freight, currency fluctuations or higher cattle prices — without necessarily expanding margins. In other words, the sector can defend prices. It cannot yet defend margins.
For companies such as JBS, Minerva and the newly formed MBRF, this dynamic changes little in the short term — scale and diversification remain key defenses. More diversified players are better positioned to navigate this environment, while those more exposed to the cattle cycle remain vulnerable to margin compression. Over the longer term, however, the risk — and the opportunity — is more nuanced: if pricing power consolidates, the sector may finally capture some of the value that currently escapes it. The world may need more meat. Whether it will pay more for it remains an open question.