Equity Research 17 June 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: June 2019 In our June edition of “BBQ – Ben’s Beef Quotes”, we continue to follow the industry news and data. Supply and demand imbalances and trade war pressures remain drivers of volatility and uncertainty, we remain cautious ahead. 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 A growing number of players in the plant-based meat market. Perdue, Beyond Meat, Tyson Foods, Maple Leaf Foods, and Nestle, among others, enter the alternative meats market. Growth for the plant-based segment is expected to be led by the goal to reduce meat consumption as a response to related health concerns, environmental risks, and the impact on animal welfare in industrial farming. The shift in global meat trade continues to unfold; China upped its inspection procedures on Canadian meat and meat products, on top of previous restrictions. Small changes in the industry like these can increase uncertainty and volatility in the market. Prices & Feed Production was strong for red meat given higher slaughter rates, as was for broiler; yet we see more flattish to negative growth rates for turkey. Prices continued to perform overall mixed; we generally saw positive y/y growth. Nonetheless, we remain cautious on uncertainty regarding supply/demand balancing out also as inventory levels rise and volatility for some meats continues. Trade & USDA Opportunities to fulfill the supply/demand imbalance obstructed by trade tariffs. Retaliatory tariffs continue to pressure exports; some U.S. meat producers are missing opportunities to directly export to China following the effects of ASF. Meat trade trends and market dynamics continue to shift. Uncertainty grows as changes in meat trade develop under trade wars and the global impact of ASF; new trade partners and different types of proteins (buffalo meat) are now in discussions. Meat availability expected to continue growing. USDA estimates for 2019 and 2020 red meat and poultry per capita availability at 220.8mn and 220.9mn lbs., respectively (vs. 219.5mn lbs. in 2018). Our Stocks Staying OW on TSN (Top Pick), PPC & BRFS; EW on HRL, JBS & 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 17 June 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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