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Mixed Views On JBS' Purchase Of National, Smithfield Beef
KANSAS CITY (Dow Jones)--Market analysts and agricultural economists hold mixed views of the JBS SA (JBSS3.BR) purchase of National Beef and Smithfield Foods' (SFD) beef division.
If the deals are completed, JBS would be able to slaughter about 42,000 head of cattle on a daily basis in the U.S., including fed cattle and cows. Tyson Foods (TSN) and Cargill can each slaughter about 28,000 head, according to industry analysts.
Many analysts and commodity brokers question whether the federal government will allow both deals to be completed because JBS would have such a large share of the U.S. cattle and beef market. The current U.S. daily cattle slaughter capacity is estimated around 127,000 to 130,000 head.
Dan Vaught, analyst with Wachovia Securities in St. Louis, said the purchases by JBS are "probably good news for producers in the short run" as the remaining big packers "fight for (market) share." However, he expects some anti-trust issues to be raised, and while the government may not prevent the deals from going through, there could be a delay for quite some time.
Glenn Grimes, agricultural economist at the University of Missouri, said he doesn't expect the deals to have much influence on the day to day operations at the existing plants. The three remaining big companies would still compete for the cattle.
However, Grimes also said that unless there is improvement in beef processing margins, there will be additional plant closures to reduce daily capacity regardless if these deals are completed.
Source: Curt Thacker, Dow Jones Newswires; 913-322-5178; [email protected].
KANSAS CITY (Dow Jones)--Market analysts and agricultural economists hold mixed views of the JBS SA (JBSS3.BR) purchase of National Beef and Smithfield Foods' (SFD) beef division.
If the deals are completed, JBS would be able to slaughter about 42,000 head of cattle on a daily basis in the U.S., including fed cattle and cows. Tyson Foods (TSN) and Cargill can each slaughter about 28,000 head, according to industry analysts.
Many analysts and commodity brokers question whether the federal government will allow both deals to be completed because JBS would have such a large share of the U.S. cattle and beef market. The current U.S. daily cattle slaughter capacity is estimated around 127,000 to 130,000 head.
Dan Vaught, analyst with Wachovia Securities in St. Louis, said the purchases by JBS are "probably good news for producers in the short run" as the remaining big packers "fight for (market) share." However, he expects some anti-trust issues to be raised, and while the government may not prevent the deals from going through, there could be a delay for quite some time.
Glenn Grimes, agricultural economist at the University of Missouri, said he doesn't expect the deals to have much influence on the day to day operations at the existing plants. The three remaining big companies would still compete for the cattle.
However, Grimes also said that unless there is improvement in beef processing margins, there will be additional plant closures to reduce daily capacity regardless if these deals are completed.
Source: Curt Thacker, Dow Jones Newswires; 913-322-5178; [email protected].