Latin America Food Manufacturers: Mexican Border Reopening: First Step Towards the Breakeven

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Latin America Food Manufacturers: Mexican Border Reopening: First Step Towards the Breakeven

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26 Jul 2026 22:53:14 ET │ 14 pages

Latin America Food Manufacturers

Mexican Border Reopening: First Step Towards the Breakeven

CITI'S TAKE

Renata Cabral AC

In our previous report, we argued that only two developments could improve +55-11-4009-7561

US Beef profitability over the medium-term: industry capacity renata.cabral@citi.com

rationalization & reopening of the US-Mexico cattle border. USDA has now

officially confirmed that Mexican cattle imports will resume in ~30 days Luis Felipe Terzariol

after over a year of border restrictions related to New World screwworm +55-11-4009-3564

(NWS). In our view, this represents the most important US beef industry luis.terzariol@citi.com

positive catalyst since the border closure. Beef packing is a high fixed-cost

business, meaning even modest improvements in cattle availability can

have a disproportionate impact on profitability through higher plant

utilization and lower procurement costs. While the reopening will be gradual

and does not alter the structural US cattle cycle, it marks the first

meaningful step toward industry earnings normalization. We continue to

view JBS as the primary beneficiary given its industry-leading exposure to

US Beef, while MBRF should also benefit through National Beef.

The Earnings Trajectory Improves. Not Overnight. During the 1Q26 earnings call,

JBS management warned that, absent an improvement in cattle availability, US Beef

margins could deteriorate by another 100–150bps in 2026 versus 2025. While the

reported reopening does not change the structural cattle cycle, it improves the

industry's earnings trajectory. We now see a significantly higher probability that US