Brazilian Poultry Exports Reaching Fresh Records; Prices Pressured on High Supply

Published 2023년 10월 12일

Brazil’s poultry exports reached new records from Jan-23 to Sep-23 in both volume and value. There is a significant contrast with beef exports, suggesting that poultry performs better due to its lower price. China continues to be the largest destination and is fueling the growth. Despite higher demand, prices continue to be pressured down due to a record supply in Brazil. This is expected to continue in the upcoming months.

According to the most recent data from the Brazil Ministry of Development, Industry, Trade and Services, Brazil's exports of poultry (HS Code 0207) from Jan-23 to Sept-23 totaled 3.65 million metric tons (mmt), amounting to a total value of USD 6.93 billion. In terms of volume, this represents an 8.5% increase or 284 thousand metric tons (mt) more compared to the same period in the previous year.

Meanwhile, the increase in value was more moderate, at 3.3%, equivalent to USD 223 million. Both of these figures represent fresh record highs for a January to September period. The average export price during this period was USD 1.90 per kilogram (kg), marking a 4.5% year-on-year (YoY) decline. Consequently, the primary reason for the value gain in 2023 can be attributed to the significantly higher export volume, which has more than offset the decline in the average export prices.

Brazilian exports are booming driven primarily by robust global demand spearheaded by China, but domestic production is effectively keeping pace with this heightened demand.

This surge in external demand can be attributed to changing consumer preferences in several countries, with many opting for poultry over beef. This shift is primarily a response to the more affordable prices of poultry, especially in the current context of generalized high prices.

Source: Tridge, Brazil Ministry of Development, Industry, Trade and Services

As the graph above shows, Brazilian poultry exports have been performing better than beef exports from Mar-23 forward. The index shows that cumulative poultry exports from Jan-22 through Sep-22 have been better than beef's during the same period. A temporary suspension of beef exports to China and other destinations was one of the main reasons initially; however, after the ban was lifted a month afterward, there were no significant changes, nor have there been any as of Sept-23, indicating a stronger demand for poultry than beef.

It's worth noting that Brazilian poultry exports are much less dependent on China than exports of beef, which in Jan-23 to Sep-23 comprised 60% of the total. As mentioned above, poultry exports to China only comprise 15% of the total.

China remains Brazil's primary export destination for poultry, receiving 15% of Brazil's total exports, which totaled 551 thousand mt from Jan-23 to Sep-23. China also exhibited the highest YoY growth in volume, surging by 34% (140 thousand mt) this Jan-23 to Sep-23, compared to the same period in the previous year. Following China in YoY volume gain was Iraq, which reached 119 thousand mt, representing a 180% growth (73 thousand mt) compared to Jan-22 to Sep-22. South Africa also saw a significant export uptick, with a 25% YoY rise (54 thousand mt).

Export Prices Down for Sixth Consecutive Month

In Sep-23, Brazil's poultry export prices fell to a fresh 19-month low of USD 1.78/kg. This level represents a decline of 14% YoY. September marked the sixth month of consecutive YoY declines. Despite higher external and internal demand, prices have dropped mostly due to higher supply. In fact, according to Brazil’s Institute of Geography and Statistics (IBGE) data, Brazilian chicken slaughter, in terms of weight, was at a record in H1 2023, up by 7% YoY to 6.8 mmt. Another factor contributing to the price downside is lower input costs, particularly of feed.

Further supply growth is expected ahead. According to the United States Department of Agriculture (USDA) data, Brazil’s chicken meat production is poised to grow 3% YoY in 2023 and 1% in 2024 to fresh record highs of 14.9 mmt and 15.1 mmt, respectively.

Yet, while prices are now notably down from last year’s levels, they remain elevated when compared to the five-year average. In fact, 2022 can be seen as an anomalous year, suffering from global supply chain disruptions (remnants of the pandemic) and other stressors such as the Russia-Ukraine conflict.

This relative elevation to their five-year average and expectations of further supply growth suggest further price downside for the upcoming months.

Source: Tridge, Brazil Ministry of Development, Industry, Trade and Services