By Brazil Stock Guide – Marfrig (MBRF3) and BRF said they have expanded their supply agreement with Saudi Agricultural and Livestock Investment Company (SALIC), a subsidiary of the Saudi sovereign wealth fund Public Investment Fund (PIF), lifting contracted volumes to as much as 870,000 tons per year — close to 1 million tons — in one of the largest protein supply deals ever signed by Brazilian companies.
The addendum to the May 2024 agreement doubles poultry shipments from 300,000 to up to 600,000 tons annually and introduces beef for the first time, with volumes of up to 270,000 tons per year. The inclusion of beef expands Marfrig’s role and turns the agreement into a multi-protein platform anchored in long-term supply.
Strategic reserves
The expansion comes as Saudi Arabia accelerates efforts to build strategic food reserves, securing supply through long-term contracts rather than relying on spot markets. The strategy opens significant space for Brazilian exporters, reinforcing the country’s position as a core supplier of animal protein to the Middle East.
For Marfrig and BRF, the deal effectively locks in demand at scale, aligning production with a sovereign-backed buyer and reducing exposure to short-term market swings.
The timing, however, reflects a more nuanced cycle. In poultry, profitability has improved mainly due to lower input costs — with feed prices down double digits — rather than stronger pricing, underscoring the sector’s dependence on external factors. That dynamic suggests margins remain sensitive, even as volumes rise.
At the same time, broader cost pressures — from grains to logistics — continue to shape the global protein landscape, making long-term contracts both a hedge and a constraint.
Read more: Food security, weak margins
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