Latin America Food Manufacturers: Protein & Livestock Weekly, Quarter-End Check on Protein Profitability

Research evidence excerpt

Latin America Food Manufacturers: Protein & Livestock Weekly, Quarter-End Check on Protein Profitability

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22 Jun 2026 19:46:14 ET │ 22 pages

Latin America Food Manufacturers

Protein & Livestock Weekly. Quarter-End Check on Protein Profitability

CITI'S TAKE

Renata Cabral AC

As 2Q26 draws to a close, the data reinforces a widening divergence across +55-11-4009-7561

protein markets. Key messages: (1) US beef remains the industry's primary renata.cabral@citi.com

earnings headwind, with processor spreads down roughly 300bpsYoY as

cattle inflation (+14.2%YoY) continues to outpace beef pricing (+10.8%YoY). Luis Felipe Terzariol

(2) Brazil beef profitability has proven more resilient than feared, with +55-11-4009-3564

processor spreads 20bps below last year (9.1% QTD 2Q26 vs. 9.3% in 2Q25) luis.terzariol@citi.com

despite growing concerns around the cycle. (3) Poultry margins continue to

normalize from peak levels but remain healthy, with spreads down only

~80bpsYoY, supported by lower feed costs and resilient export demand.

Looking ahead, a key debate is whether sharply lower pork prices (-

30.4%YoY) begin to drive more protein substitution or limiting poultry-

related processed food pricing pass-thru in 2H26. Overall, earnings

pressure remains concentrated in US beef, while Brazil proteins continue to

benefit from a more constructive supply backdrop.

US Beef: Challenging. Cattle Shortage Remains the Key Constraint. US beef

margin backdrop remains difficult in 2Q26 (-300bpsYoY), and we see limited scope

for a near-term recovery before 2028. Against this backdrop, meatpackers have

been reporting margins in negative territory, reflecting the mismatch between

constrained cattle availability and still-elevated industry capacity. One key debate