The Dutch and European poultry sectors face a significant threat due to the implementation of tariff-free trade clearance for poultry meat from Ukraine. Ukrainian poultry meat imports surged by over 240% year-on-year (YoY) to more than 218 thousand metric tons (mt) from Jun-22 to Jun-23. This significant rise is impacting chicken fillet prices in Europe and putting the entire European Union’s (EU) poultry meat market at risk.
The sector urgently calls for new import quotas, citing challenges posed by the influx of 220 thousand mt of cheap poultry meat from Ukraine, which does not meet domestic animal welfare and environmental standards. This has led to job losses in the Dutch sector as Ukraine exploits reduced grain prices to sell chicken meat at dumping rates in the European market. Despite collective support for Ukraine, the sector emphasizes the need for free trade with shared standards, as imported chicken has lower standards in various aspects. The Dutch sector, known for its high environmental and animal welfare standards, faces challenges competing globally due to elevated production costs.
The Secretariat of Foreign Trade (Secex) reports that Brazil’s fresh chicken meat exports have already reached 4.25 million metric tons (mmt) so far in 2023, representing 96% of the slightly over 4.43 mmt volume recorded in 2022. If the current daily average is maintained, the 2022 level will be achieved by the end of Nov-23.
Fresh chicken meat shipments amounted to almost 225 thousand mt in the first three weeks of Nov-23, with W3 exports totaling 76 thousand mt, a 10% drop compared to the first two weeks due to a holiday break. The daily average shipment stood at over 20.44 thousand mt in the first 14 working days of Nov-23, a 14.63% month-on-month (MoM) increase and a 17.39% YoY rise. If the current export pace is maintained, Nov-23 shipments will likely surpass 400 thousand mt once again and recover from the 374.54 mt recorded in Oct-23. However, the average export price stands at USD 1,749.66/mt so far in 2023, a decline of more than 1% MoM and a 15.5% year-on-year (YoY) drop, indicating no chance of a rebound.
The retail and wholesale prices of chilled chicken in São Paulo, Brazil, exhibited a consistent difference of approximately 2%, maintaining this parity over the years. During Christmas 2019, the margin between wholesale and retail for chilled chicken was around 39%, with prices increasing from USD 1.10 per kilogram (kg) to USD 1.52/kg. In Oct-23, these values ranged between USD 1.48/kg and USD 2.08/kg, resulting in a margin of 41%, a slight increase of 2%. This parity persisted between H2-2020 and most of H2-2022, with occasional instances where wholesale prices changed more than retail.
However, retail prices for São Paulo consumers increased significantly more than wholesale prices or experienced minimal drops in subsequent periods. For instance, in Jan-22, wholesale prices fell by almost 27% in one quarter, while the reduction in retail was less than half that amount (12.9%), creating a margin of 76%. The most significant disparity occurred in Apr-20, when consumers paid the same amount for chilled chicken as in Christmas 2019, despite a nearly 25% drop at the wholesale level. The margin exceeded 80%, indicating that losses recorded at the wholesale level are not consistently transferred to the end consumer.
The United States Department of Agriculture (USDA) reported the culling of 1.35 million chickens in Union County in Ohio, United States (US), following the confirmation of a case of the highly contagious bird flu in the flock in W47. Despite a milder outbreak in 2023 than in early 2022, 8.1 million birds have been culled this year, with 5.8 million recorded in Nov-23 alone, notably affecting large egg farms. This includes 1.2 million birds at an Iowa egg farm and 940 thousand chickens at a Minnesota egg farm. Due to their extensive scale, egg farms, particularly in Iowa, the US's largest egg-producing state, have been impacted significantly, with almost 17.3 million birds killed. Ohio has reported 5.1 million bird deaths from bird flu.
In W47, notable bird flu cases were confirmed in farms across Minnesota, Maryland, South Dakota, Wisconsin, Georgia, and California. In 2022, approximately 58 million birds were culled due to the outbreak, emphasizing the highly contagious nature of the virus, easily transmitted by wild birds through droppings and nasal secretions.