Beef will be getting even more expensive at U.S. grocery stores in the months ahead, according to one of the country’s biggest meatpackers.
National Beef Co., controlled by the Brazilian giant Marfrig Global Foods, sees relatively stable margins in the next two quarters, according to Tim Klein, who heads Marfrig’s U.S. operations. That means even though their costs to buy cattle are increasing, the company will ultimately be able to pass that on to consumers in the form of pricier steaks and burgers.
“Cattle prices will go up, and beef prices will go up with them,” Klein said during an earnings interview.
The cost of meat has been a focus as consumers grapple with the fastest inflation in four decades. The average price for ground beef in America grocery stores has jumped 18% from a year ago, according to the government data. American shoppers may adapt to inflation by switching to less expensive cuts, according to Klein.
Marfrig beat analysts’ estimates for earnings before items and revenue, posting a record for a first quarter. U.S. operations drove the gains, while South America’s unit started a recovery amid booming Chinese demand and improving cattle supply in Brazil, according to Miguel Gularte, who heads operations in the region. Marfrig’s slaughterings in Brazil rose 20% in the quarter, the double compared with the industry average, Gularte said.
Net income fell 61% from a year ago due to a non-cash loss on the mark-to-market of its stake in the food giant BRF SA. Starting next quarter, Marfrig will add BRF earnings to its balance sheet, according to Chief Financial Officer Tang David. Last month, Marfrig’s founder, Marcos Molina dos Santos, was elected BRF chairman.