LatAm Proteins: Screwworm in Texas; Concerns Seem Overblown

Research evidence excerpt

LatAm Proteins: Screwworm in Texas; Concerns Seem Overblown

Idea

June 9, 2026 01:21 AM GMT

Morgan Stanley C.T.V.M. S.A.+MLatAm Proteins | Latin America Ricardo L Alves

Equity Analyst

Screwworm in Texas; Concerns Ricardo.Alves@morganstanley.comLucas T Mussi +55 11 3048-6238

Research Associate

Lucas.Mussi@morganstanley.com +55 11 3048-9565

Seem Overblown Henrique Morello

Henrique.Morello@morganstanley.com +55 11 3048-6041

Screwworm concerns for the US beef players seem overblown

LatAm Food & Beverage

to us. We don't think it should hit cattle supplies significantly Latin America

(the herd is already tight), and it may trigger packer Industry View No Rating

rationalization. The situation is fluid, but with JBS down ~5%

since the first case, the market may have overreacted.

The spread of New World Screwworm (NWS) in Texas has raised investor

concerns and pressured protein stocks in recent days. We think the reaction is

overdone. Since the first suspected NWS case was disclosed in Texas on June 3, US

packers have underperformed, with JBS/TSN -2pp vs. the S&P 500 (-5pp/-3pp in

yesterday's session alone). Additional confirmed cases in the past few days (now at

four) added to the concern. While we think a hypothetical scenario of a broader

spread of NWS could pressure beef spreads further NT due to restrictions on cattle

movement (we are not concerned about eventual sanitary culling), we see limited

downside risk to current US beef industry spreads (e.g., MSe already assumes JBS

US Beef EBITDA mg at -2.2% this year). Another important — and positive —

consideration for us is that, since we've been through the trough of the US cattle

cycle for a while now, with all local packers burning cash, we think the noise around

NWS could accelerate rationalization in packing capacity.