SAO PAULO: Brazilian food giant BRF SA (BRFS3.SA) expects China and Europe to lift bans on chicken imports within days or weeks, as the country regains international confidence after containing a bird flu outbreak earlier this year. The resumption of sales to these critical markets could ease excess inventory pressures and reinforce Brazil’s standing as the world’s leading poultry exporter.
Brazil confirmed its first case of avian influenza in a commercial chicken breeder farm in May, prompting a wave of temporary trade restrictions from major buyers, including China and the European Union. However, after swift government action and stringent control measures, Brazil was officially declared free of highly pathogenic avian influenza (HPAI) in June, paving the way for the gradual reopening of export markets.
Inventories pile up, but relief in sight
During a conference call on BRF’s second-quarter results, CEO Miguel Gularte acknowledged that food inventories had climbed above “desirable levels” due to export restrictions.
“As those two markets reopen we will return to inventory levels closer to zero,” Gularte told analysts. “It is our philosophy not to keep inventories without sales.”
BRF, one of the world’s largest poultry processors, emphasized that China and Europe remain “extremely important” markets for the company’s global strategy. Earlier this week, both Saudi Arabia and Chile officially resumed purchases, giving further momentum to Brazil’s poultry trade recovery.
Redirecting exports and managing losses
While awaiting the reopening of China, BRF diverted some chicken cuts originally destined for the Asian market to other destinations. Even so, the company reported a 5% drop in poultry exports in Q2, compared with a broader 15% decline in Brazilian poultry shipments overall.
Analysts say BRF managed the crisis better than expected. Goldman Sachs noted that BRF’s performance was “surprisingly positive” despite the bird flu challenges, while Genial Investimentos highlighted that the company’s EBITDA and margins exceeded market expectations.
Outlook: Lower grain prices to boost margins
Looking ahead, BRF is optimistic about the remainder of 2025, as easing grain prices – particularly corn – are expected to significantly reduce production costs. Management forecasts that lower feed prices will expand margins in Q3 and Q4, potentially setting up a strong rebound year for the poultry processor.
On Friday, BRF’s shares rose nearly 4% in Sao Paulo trading, reflecting growing investor confidence in the company’s resilience and global market outlook.
Brazil’s poultry powerhouse
The developments underscore Brazil’s dominance in global poultry exports, with BRF at the forefront of supplying halal markets in the Middle East, high-demand consumers in Asia, and premium buyers in Europe. With trade restrictions easing, analysts expect Brazilian poultry exports to regain momentum in the second half of the year.
