(Updates with closing prices, analyst quote)
By Ana Mano
CUIABÁ, Brazil, May 25 (Reuters) - Shares in JBS SA , the world's largest meatpacker, spiked on Thursday as speculation mounted over its strategy for weathering the fallout from a corruption scandal centered on its owners.
The stock closed 23 percent higher, approaching levels last seen before the graft scandal rattled Brazil a week ago and leading gains on the benchmark Bovespa stock index.
Still, traders and analysts warned volatility was likely to remain high due to doubts about how a raft of probes targeting the company will be resolved.
"It's a mess," Lerosa Investimentos analyst Vitor Suzaki said. "There's little in the way of concrete market drivers and plenty of speculation to beat the stock up and down."
Joesley and Wesley Batista, JBS' controlling shareholders, recently touched off a political firestorm after admitting they bribed hundreds of Brazilian politicians to advance their businesses interests in a scandal that has ensnared President Michel Temer.
They are now trying to negotiate a leniency deal with prosecutors that would allow them to avoid prosecution in exchange for paying a hefty fine and revealing all their illegal dealings. JBS Chief Executive Officer Wesley Batista is personally negotiating with prosecutors.
While the Batistas initially rejected the size of the fine proposed by prosecutors, it looks unlikely to be significantly reduced. That could push their holding company J&F Investimentos SA to sell assets to raise cash to pay for it, Reuters reported this week.
The Batistas transformed the company from a regional slaughterhouse into Brazil's dominant beef producer and a sprawling multinational group, helped by some 8 billion reais ($2.44 billion) in government funding.
Brazil's agriculture minister on Thursday slammed state development bank BNDES for helping JBS build a dominant market position.
"I was always critical of the BNDES for having allowed this market concentration that exists in Brazil," Blairo Maggi said at an agribusiness conference in Cuiaba, the capital of Mato Grasso state in Brazil's biggest cattle-growing region and agricultural heartland. He called JBS' current predicament a "delicate moment."
"I don't know what's going to happen with this company," said Maggi, also a billionaire soybean producer.
Separately, a major cattle industry consultant said Brazilian ranchers were starting to demand that JBS pay in cash because they are worried about fallout from the bribery scandal.
"People are risk-averse," said Agriffato director Lygia Pimentel. "Producers aren't selling to JBS, and those who are, are doing their utmost to get cash in return."
JBS, on the other hand, recently told cattle ranchers in Mato Grosso it preferred to make payments in installments or with a 30-day post-delivery period. The effort has made little progress with ranchers, according to trade group Acrimat.
JBS has bought many rivals in important cattle-producing regions in Brazil in recent years. In some places it is the only processor, leaving ranchers with no other buyers.
JBS confirmed it was seeking to stretch out payments over longer periods, but said the initiative dated back to before the bribery scandal broke. ($1 = 3.2849 reais) (Additional reporting by Roberto Samora; Writing by Silvio Cascione, Christian Plumb and Bruno Federowski; Editing by Jeffrey Benkoe and Tom Brown)