W24: Chicken Update

In W24 in the chicken landscape, MAPA informs that two suspected cases of avian influenza are being investigated in Rio Grande do Norte in Brazil. One of the samples was collected in the municipality of Parnamirim, and the other in Currais Novos, both from subsistence breeding chickens. So far, Brazil has reported 31 cases of the highly pathogenic avian influenza disease, all in wild birds, with 14 ongoing investigations. These outbreaks are in the states of Espírito Santo (20), Rio de Janeiro (8), São Paulo (1), Bahia (1), and Rio Grande do Sul (1). In Jan-May 2023, external sales of Brazilian chicken grew from 1.989 million mt to 2.181 million mt, up 9.65% YoY, with value increasing from USD 3.739 billion to USD 4.318 billion, an increase of 15.49% YoY. Brazil consolidates its position as the world’s second-largest producer and the largest exporter in the chicken market. In that period, Brazilian chicken shipments were mainly destined for China (+32.6%), Japan (+8%), South Africa (+12.1%), Saudi Arabia (+19.4%), and the EU (+3.4%). The chicken shipments were mainly sourced from the states of Paraná (+11.7%), Santa Catarina (+8.7%), Rio Grande do Sul (+0.8%), São Paulo (+19.9%), and Goiás (+33.7%).

In the first 14 days of June, in Brazil, the average prices of chicken, pork, and beef have been registering strong falls. However, according to CEPEA, the falls in the prices of pork and beef proteins have been even more intense than chicken, resulting in a decrease in the competitiveness of poultry in June-2023. The pressure on chicken prices comes from the high supply, a scenario that has been registered since May-2023. In addition, chicken industry agents have reduced protein prices, aiming to sell the meat and avoid inventory increases. According to APINCO, on internal housing of broiler chicks (just over 546 million heads in Apr-2023), AviSite projections indicate that, between mid-May and the first ten days of June, the availability of Brazilian chickens ready for slaughter would have fallen to the lowest level in nine months. Thus, considering the viability of 96% of the chicks housed and slaughtered at 42 days of age, the average supply for the period was around 17.5 million head/day, a drop of around 2% MoM and almost 3.5% YoY. The decline, however, did not and is not having the slightest effect on slaughtered chicken prices. On the contrary, they remained in decline at the close of the first two weeks of June, reaching, on average, the lowest value of the last 33 months. Naturally, this decrease has been determined by the reduction in the cost of the sector's basic raw materials as well as the consumer's loss of purchasing power.

Turkey Statistical Institute (TUIK) reports that April chicken meat production totaled 180.5 thousand mt, a decrease of 9.4% YoY, while the number of slaughtered chickens dropped 12.7% YoY. In the Jan-April period, Turkish chicken production decreased by 4.2% YoY, while slaughtered chicken declined by 7.8% YoY. Lastly, Tridge’s data analysis indicates that in W24, South Korean native chicken prices eased by 0.9% WoW from the 37-week high reached on June 5th, at USD 6.37/kg. However, prices were still 3% higher MoM and 25% higher YoY. Prices rose sharply in May-2023, adding to gains from April-2023 after the detection of a foot-and-mouth disease (FMD) case that pressured chicken prices upward due to movement restrictions and fear over potential shortages. The crisis level, which was at its maximum on May 19th, was de-escalated on June 14th, as there were no further detections of the disease during the month. Moving forward, South Korean native chicken prices are likely to be pressured down as fear over potential supply disruptions continue to ease. Nonetheless, the downside seems limited as demand continues to rise and overall output hasn't been enough to ease consumption growth.