Brazil meatpacking shares surge on EU-Mercosur trade deal

FILE PHOTO: The logo of Brazilian meatpacker JBS SA is seen in the unit in the city of Jundiai, Brazil June 1, 2017. REUTERS/Paulo Whitaker

SAO PAULO (Reuters) - Shares of Brazilian meatpackers rose sharply on Monday on prospects for stronger exports to the European Union following a trade deal reached last week with South American bloc Mercosur.

JBS SA, the world’s largest meat producer, rose 6% to 22.51 reais in late afternoon trade, while rival BRF SA, the world’s biggest chicken exporter, jumped 8% to 31.91 reais. Marfrig Global Foods, which is in talks for a merger with BRF, rose more than 3%.

Under the agreement announced on Friday, the Europeans will lower tariffs on a range of agricultural commodities from the Mercosur trade bloc, including beef, poultry, pork, sugar, cheese and honey, according to terms detailed by the EU on Monday.

The EU has agreed to reduce barriers on 82% of agricultural imports from the Mercosur bloc over a transition period of up to 10 years, Brussels said, adding the EU also offered more partial commitments including quotas for more sensitive farm products.

For beef, Brussels said the agreement would allow EU imports of 99,000 tonnes from Mercosur a year, with a tariff of 7.5%.

The agreement also allows 180,000 tonnes of poultry imports from Mercosur “duty free,” along with 25,000 tonnes of pork at a duty of 83 euros per tonne, according to the terms of the deal, which Brussels said would be implemented in phases.

Brazilian President Jair Bolsonaro said it could take up to three years for full implementation of the accord, which requires legislative approval from all countries involved.

The EU and Mercosur, which was founded in 1991 by Argentina, Brazil, Paraguay and Uruguay, together form a market with 780 million people and a quarter of global gross domestic product, Brazil’s Agriculture Ministry said last week.

Brazilian exports to the EU last year totaled some $42 billion, almost a fifth of total exports from the country, according to the ministry.

Reporting by Ana Mano; Editing by Brad Haynes and Peter Cooney