Equity Research 18 March 2019 CORE Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This research report has been prepared in whole or in part by equity research analysts based outside the US who are not registered/qualified as research analysts with FINRA. PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 18. Restricted - Internal Americas Agribusiness BBQ – Ben’s Beef Quotes: March 2019 Due to the US government shutdown and delayed data availability we decided to skip our February edition of BBQ. Now as data feeds have been updated, we are presenting our March edition of “BBQ – Ben’s Beef Quotes”. As in the past we highlight important news, major trends in agri-product pricing, demand and trade data. We include eggs, poultry, pork, some lamb and veal – it’s not all beef! News U.S. lawmakers debate over ‘meat’ substitutes in fear of the threat it poses to the US$110bn U.S. meat market. Among many bills which have been presented regarding plant-based products, some without success, the latest bill proposes making it illegal to label meat alternatives/substitutes as ‘meat’. Following 25 recalls of millions of pounds of meat and processed foods, the USDA sets new guidelines for food companies. An increase in recalls of meat and poultry products drove the U.S. government to increase its regulatory requirements for the internal investigation processes as well as the way the companies receive and deal with client complaints around the topic. Prices & Feed Our outlook continues to be cautious considering ongoing uncertainty in some markets. Overall, while some metrics have shown improvements or maintain healthy growth, others remain under pressure given volatility and uncertainty. Chicken production still at positive growth rates, while turkey and red meat production had a weaker performance. Flattish slaughter rates and lower numbers of turkey eggs in incubators drove red meat and turkey productions contractions. Trade & USDA U.S. – E.U. trade negotiations focus on agricultural issues. Key topics include UK markets’ bans of products including GMOs, hormone-boosted beef, and chlorine-cleaned chickens, among others. We expect to see an extensive agenda ahead. USDA takes action on food safety concern. Chicken and beef standards must improve in order to help the domestic market as well as to expand to other markets. Meat availability expected to further expand. USDA estimates for 2019 poultry and red meat per capita availability at 220.5mn lbs. (vs. 218.8mn lbs. in 2018). Our Stocks Staying OW on TSN (Top Pick), PPC, JBS & BRFS; EW on HRL & SAFM and UW on MRFG. INDUSTRY UPDATE Americas Agribusiness NEUTRAL Unchanged Americas Agribusiness Benjamin M. Theurer +52 55 5241 3322 benjamin.theurer@barclays.com BBMX, Mexico Antonio Hernandez + 52 55 5241 3323 antonio.hernandez@barclays.com BBMX, Mexico Barclays | Americas Agribusiness 18 March 2019 2 CONTENTS AMERICAS AGRIBUSINESS .............................................................................. 3 News................................................................................................................................................................... 3 Commodity trends ......................................................................................................................................... 4 Price performance .......................................................................................................................................... 5 EGGS AND POULTRY ........................................................................................ 6 Production & Capacity .................................................................................................................................. 6 Pricing ................................................................................................................................................................ 7 Feed-Price Ratios ......................................................................................................................................... 10 Trade ............................................................................................................................................................... 11 RED MEAT ......................................................................................................... 12 Production & Capacity ............................................................................................................................... 12 Pricing ............................................................................................................................
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