W31: Chicken Update

In W31 in the chicken landscape, the National Supply Company (Conab) expects Brazilian chicken meat production to reach 15.21 million metric tons (mmt) in 2023. This reflects a 2.9% year-on-year (YoY) increase, the second highest on record. Additionally, Conab estimates a significant 10.2% YoY surge in chicken exports to a record 5.13 mmt. While the domestic market's steady supply exerts downward price pressure, strong demand is anticipated to persist. Despite robust export levels, concerns arise over potential global embargoes due to avian influenza, exemplified by Japan's recent embargo on Santa Catarina state. Conab highlights that favorable production and avian flu records in regions like Europe, Japan, and the United States (US) amplified demand for Brazilian chicken meat.

The Brazilian chicken market witnessed a significant decline in prices for key cuts in wholesale and distribution in Jul-23, attributed to oversupply challenges. Safras & Mercado indicate the complexities Brazilian poultry farming faced, with prices significantly decreasing, especially in wholesale chicken meat. Despite robust export flows, oversupply remains a major challenge for sales. In the first 15 working days of Jul-23, poultry meat and edible offal, fresh, chilled, or frozen exports from Brazil reached 298.49 thousand metric tons (mt), valued at USD 585.55 million, with a daily average of USD 39.04 million. The average price was USD 1,961.70/mt. Notably, there was a 2% decrease in the average daily value, a 11.1% increase in the average daily quantity, and a 11.8% decrease in the average price compared to Jul-22. Safras & Mercado further indicated significant wholesale price reductions in São Paulo for various frozen and chilled chicken cuts throughout Jul-23, highlighting the prevailing market challenges.

The Center for Advanced Studies on Applied Economics (Cepea) reports that chicken meat prices in Brazil experienced a decline within the domestic market during Jul-23. Cepea attributes this price pressure to the combination of increased supply and sluggish domestic demand. Cepea reveals that in Greater São Paulo, wholesale prices for chilled whole chicken averaged USD 1.15/kilogram (kg), a significant 6.8% drop compared to Jun-23. The Secretariat of Foreign Trade (Secex) reports that Brazilian fresh chicken meat exports amounted to 404.6 thousand mt in Jul-23, a 3.5% month-on-month (MoM) decrease but an increase of 7% YoY.

Lastly, South Africa concluded a 12-month suspension of anti-dumping duties on poultry from five nations. This followed an investigation into allegations of dumping frozen bone-in chicken portions, like leg quarters, imported from Brazil, Denmark, Ireland, Poland, and Spain. The International Trade Administration Commission (ITAC) confirmed the dumping of poultry into the Southern African Customs Union (SACU) market. This led the South African Minister of Trade and Industry to endorse the imposition of anti-dumping duties. These reinstated tariffs include rates as high as 265% on Brazilian imports (in addition to the existing 62% tariff), 67.4% on Denmark, 85.8% on Spain, 96.9% on Poland, and 158.4% on Ireland.