By Brazil Stock Guide — Brazil’s cattle cycle is showing early signs of a turnaround after more than four years of elevated slaughter, potentially setting the stage for higher cattle procurement costs and tighter profit margins at the country’s major beef processors.
The assessment comes from Brazilian investment bank BTG Pactual, which argues that a prolonged period of herd liquidation may finally be drawing to a close as ranchers begin retaining more female cattle for breeding.
According to the bank, the current herd liquidation phase has lasted approximately 53 months, longer than any of the previous three cycles. The extended period of abundant cattle supplies has been supported by high interest rates and strong international demand, particularly as declining beef production in the United States has created additional opportunities for Brazilian exporters.
The first signs of a shift are emerging in data from Brazil’s statistics agency, IBGE.
In the second quarter of 2026, Brazilian slaughterhouses processed 10.7 million head of cattle, up 1.3% from a year earlier and a record for the period.
Beneath that headline figure, however, the composition of slaughter is beginning to change.
Female cattle slaughter declined 1.9% year over year, its first annual contraction since the fourth quarter of 2021. The share of females in total slaughter fell to 49%, compared with 51% a year earlier.
For BTG Pactual analysts Thiago Duarte and Guilherme Guttilla, the figures suggest ranchers may be starting to retain breeding females to rebuild their herds — a development that typically marks the beginning of a new phase in the cattle cycle.
High interest rates and exports prolonged the cycle
BTG Pactual argues that elevated interest rates have played an important role in extending the herd liquidation phase.
When borrowing costs are high, the immediate cash proceeds from selling cattle become relatively more attractive than the future income ranchers might earn by retaining breeding females and raising additional calves.
This helps explain why producers continued sending females to slaughter even as rising calf prices began to improve the economics of herd rebuilding.
Interest rates alone, however, do not fully explain the unusually long cycle.
The bank notes that the current liquidation phase has lasted longer than the one recorded in the early 2000s, despite lower average interest rates during the current period.
Strong export demand has been another important factor.
With U.S. beef production declining, Brazilian exporters have benefited from favorable international market conditions, sustaining demand for slaughter-ready cattle and encouraging processors to maintain high operating volumes.
China may also have contributed to the cycle’s unusually long duration.
According to BTG Pactual, the introduction of import quotas for 2026 encouraged exporters to bring shipments forward, supporting cattle demand even as higher calf prices increasingly favored retaining females for breeding.
Meatpacker margins could come under pressure
A potential shift in Brazil’s cattle cycle presents a challenge for the country’s beef processing industry, which includes major exporters such as JBS, Minerva Foods and MBRF.
During a herd liquidation phase, abundant cattle availability generally benefits meatpackers by supporting plant utilization and providing a relatively favorable environment for livestock procurement.
That balance changes when ranchers begin retaining more females for breeding.
As fewer animals become available for slaughter, processors may face greater competition for cattle, pushing procurement costs higher and potentially squeezing operating margins.
The financial impact will depend on how quickly cattle supplies tighten and whether processors can pass higher livestock costs on to customers in domestic and international markets.
Export demand, beef prices and the competitive dynamics of individual markets will also influence how the shift affects each company.
Although Brazil’s total cattle slaughter remains at record levels, BTG Pactual believes the changing composition of the animals being processed is an important early indicator.
After an exceptionally long period of herd liquidation, female retention may finally be gaining momentum.
If the trend persists over the coming quarters, it could gradually reduce the availability of slaughter-ready cattle and create a more challenging operating environment for Brazil’s beef processors.
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