Brazil Pulp Makers, Meatpackers Sink as Real Surge Hurts Exportsby
Beef supplier JBS gets most of its revenues in dollars
Fibria and Suzano post biggest drops since financial crisis
Brazil’s top meat and pulp producers tumbled as a surge in the real against the dollar dimmed the prospects for their export revenues.
JBS SA, the world’s largest meat producer, sank as much as 16 percent while Fibria Celulose SA and Suzano Papel e Celulose SA, two of the world’s largest pulp producers, both fell the most intraday since the height of global financial crisis in 2008.
The real rose as much as 3.9 percent on Friday after a federal police raid on the house of former President Luiz Inacio Lula da Silva, fueling speculation that support will grow to impeach his mentee and successor, President Dilma Rousseff. Some investors see a Rousseff ouster as way out of the country’s political and economic crisis. Sao Paulo Stock Exchange Index Ibovespa surged as much as 6 percent, the biggest gain intraday since Oct. 2014.
However, some of Brazil’s largest commodity producers suffered. JBS, which gets more than 80 percent of its revenue in dollars, slid 16 percent to 10.62 reais at 1:31 p.m. in Sao Paulo. Marfrig Global Foods SA and Minerva SA, which also have substantial export businesses, fell as much as 7.5 percent and 9.5 percent respectively.
Fibria has about 90 percent of its sales in Europe, North America and Asia. Its shares declined as much as 13 percent, heading for a fourth consecutive loss. Suzano, which also sells most of its pulp outside Brazil, declined as much as 11 percent.
"Investors are now seeking protection against the currency appreciation," Alan Glezer, an analyst at the investment banking unit of Banco Bradesco SA, said in a phone interview Thursday.
Pulp producers were the biggest gainers in dollar terms in the Ibovespa last year as a 33 percent decline in the Brazilian currency against the dollar boosted their competitiveness in export markets.