W42: Chicken Update

In W42 in the chicken landscape, the United States Department of Agriculture (USDA) expects global chicken meat production to grow by a modest 1% year-on-year (YoY) to a record 103.3 million metric tons (mmt) in 2024. This is a significant improvement compared to the less than 0.5% growth predicted for 2023. This positive trend is due to Brazilian chicken production, which is forecasted to reach 15.05 mmt. On the other hand, the USDA anticipates China's chicken meat production to decline by 3% YoY to 13.87 mmt in 2024. This contrasts with the nearly stagnant growth observed so far in 2023. The decrease is primarily attributed to the avian influenza impact, which has affected breeding stock imports from countries dealing with the disease. Brazil is set to solidify its position as the second-largest global chicken meat producer, with a lead of over 1% compared to China, likely increasing to 8.5% in 2024.

Tridge’s analysis highlights contrasting trends in the European Union's (EU) chicken and beef markets. Chicken meat production in the EU is forecasted to grow by 1.4% YoY in 2023 and 0.6% YoY in 2024. This is predominantly driven by strong demand, anticipated to rise by 1.8% YoY in 2023 and 0.8% in 2024. However, beef production is expected to decline by 3.3% YoY in 2023 and 0.9% YoY in 2024, the seventh consecutive YoY drop. Beef consumption is also projected to fall by 2.7% YoY in 2023 and 0.6% in 2024 due to elevated prices, leading consumers to shift to more affordable proteins. Chicken prices have risen significantly but remain notably cheaper than beef, contributing to their strong demand.

The EU's trade surplus is expected to decline, leading to increased chicken imports, primarily for the hotel, restaurant, and institutional sectors. However, EU chicken exports are limited due to avian influenza bans and higher prices than competitors like Brazil. Beef exports and imports are expected to decline in 2023 due to falling production and consumption, with imports remaining steady in 2024. Despite anticipated inflation decreases, both chicken and beef prices will likely remain elevated due to regulatory factors and changing market dynamics.

Tridge’s data analysis indicates that frozen whole chicken wholesale prices in Madrid, Spain, hit a 12-week peak at USD 2.98 per kilogram (kg) in W41, a significant 12% YoY rise. Notably, this rise deviates from Spain’s usual seasonal downward trend for whole broiler prices. Chicken prices in Spain usually decrease during this time of the year until they touch their lowest levels over the Christmas and New Year holidays as consumption shifts toward other proteins. The unusual price surge is attributed to increased chicken demand as a more cost-effective alternative to beef, particularly amid the prevailing high prices across the region. As evidence of this growing demand, Spain saw a 12.5% YoY increase in poultry imports from Jan-23 to Aug-23. Chicken prices in Spain are expected to experience their normal seasonal downward pressure eventually but remain relatively higher than the 2022 and pre-pandemic levels.

Lastly, poultry product prices in Brazil continued to rise in the first half of Oct-23 compared to Sep-23. The Center for Advanced Studies on Applied Economics (Cepea) attributes this upward price trend to the adjustment in domestic poultry supply, which began in Aug-23, and robust export activity. Whole chilled chicken prices reached an average of USD 1.42/kg, a 4% month-on-month (MoM) growth, and the third consecutive month of increasing monthly averages for this product.