Weekly Product Updates

W49 Chicken Update: Brazil's Export Decline, Russia's Cost Surge and Singapore's Response to Avian Influenza

Frozen Whole Chicken
Singapore
Published Dec 14, 2023
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Brazil's Chicken Meat Exports Performance and Year-End Projections for 2023

Brazil's chicken meat exports in Nov-23 reached around 368.5 thousand metric tons (mt), a 2% year-on-year (YoY) increase but a 6% month-on-month (MoM) decrease. However, foreign exchange revenue experienced a more significant decline, totaling USD 665.3 million, representing drops of 6.5% MoM and 12.7% YoY. This financial result is the worst in the last 21 months, reflecting a continuous decrease in the average product price.

Nov-23's performance marked the weakest in the last 12 months in terms of volume, but this decline is attributed to importers already having stocked up for the festive period. With one month remaining in the year, total shipments have increased by approximately 6.5% YoY, totaling around 4.56 million metric tons (mmt). Foreign exchange revenue, nearing USD 8.83 billion, representing a 2% YoY decrease.

Despite the slight decrease in Dec-23, the year is expected to end with a minor drop (less than 0.5%) compared to the previous year. YoY revenue accumulated remains positive at 1.39%, while the volume shows an increase of more than 5%.

Russia's Poultry Industry in 2023 and the Prospects for 2024

In 2023, Russian poultry farmers faced a significant cost increase, with labor and equipment maintenance rising by 25 to 30% YoY, vaccines and pharmaceuticals by 15 to 25% YoY, and packaging by 8 to 25% YoY. Consequently, consumer prices surged, with a pack of eggs costing Russian customers 25% more in Oct-23 YoY. The price of a broiler carcass saw a nearly 50% YoY increase.

The Russian government's customs commission approved a substantial duty-free import quota of 160 thousand mt for broiler meat in 2024, with a significant portion anticipated to originate from countries outside the Commonwealth of Independent States (CIS) region. This marks a departure from previous years when imports, mainly sourced from Belarus, benefited from a common customs space with Russia as part of the Eurasian Economic Union.

The primary objective behind allowing duty-free chicken imports is to stabilize domestic market prices, particularly amid the current abnormal poultry pricing in Russia. While Belarus played a central role in supplying broiler meat to Russia due to its common customs space, the new quota opens up possibilities for a substantial increase in poultry imports from other nations in 2024, potentially tripling compared to previous years. The decision to expand the import quota comes as poultry prices in Russia experience unprecedented turbulence. When adjusted for annual inflation, current prices are reported to be the highest since 2014, the year when Russia imposed a food embargo, restricting imports from the European Union (EU).

Factors contributing to pricing instability include the impact of bird flu and low business marginality in the Russian poultry market. The Russian poultry union, Rosptitsesoyuz, highlighted that operational costs for poultry farmers have surged, leading to financial strain. Over the past few years, farmers refrained from investing in new capacities, resulting in the decommissioning of old operations with limited opportunities for replacement.

Despite challenges in the Russian poultry industry, poultry production in 2023 is predicted to remain at the previous year's level. The economic strain on poultry farmers, coupled with external factors affecting the market, underscores the need for measures such as the duty-free import quota to stabilize prices and ensure a steady supply of broiler meat in the Russian market.

Singapore Suspends Poultry Imports Amidst Global Avian Influenza Outbreak

Singapore has temporarily halted the import of raw poultry and related products from regions in countries affected by the highly pathogenic H5N1 avian influenza, including Japanese prefectures Saga, Ibaraki, Saitama, and Kagoshima, as well as areas in the United States (US), Canada, France, Belgium, and Germany. The Singapore Food Agency (SFA) issued circulars on December 8 to meat and egg traders, citing the need for the restriction due to the bird flu outbreak. Heat-treated poultry products conforming to World Organization for Animal Health guidelines are exempt from this restriction. Singapore, which approved 30 countries as poultry sources in 2022, receives its top chicken imports from Brazil, Malaysia, and the US. The SFA monitors global avian influenza outbreaks and suspends sources with high pathogenicity avian influenza, emphasizing biosecurity measures at local poultry farms and slaughterhouses.

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