Brazil poultry production hits record high, despite soaring feed costs

26.08.2016

Brazilian broiler meat production is forecast to rise by 3.0% in 2017, hitting an all-time high of 14.08m tonnes, as export demand increases, US officials say.

The US Department of Agriculture's bureau in Brasilia forecast record production and exports, as Brazil wins market share, particularly in China and the European Union.

Brazilian broiler meat exports are forecast to hit a record 4.4m tonnes in 2017.

Chinese market share

"The growth in exports will likely be driven by higher world demand for the Brazilian products, mostly from China, the European Union and new markets recently opened," the bureau said.

In particular, Brazil has been rapidly winning market share in China.

The outbreak of Avian Influenza in the US lead to a Chinese ban on poultry from that destination.

This forced Chinese buyers to look elsewhere, driving a rapid increase in the number of Brazilian plants that are approved to produce meat for Chinese imports.

"Currently 29 plants are approved for China, but by the end of the year this number may increase to 40 plants in 2017<" the bureau said.

"A Brazilian trade mission is expected to visit China in September with the purpose to negotiate new plants approvals to that market."

High feed costs

But high feed costs are still constraining production, the bureau said.

A long period of currency weakness fuelled heavy corn exports, and the rapid forward selling of the crop just finished.

But the safrinha, or second crop, harvest was disappointing this year, leading to a crunch in domestic corn supplies which sent prices soaring by about 90% this year.

Margins narrow

The squeeze on feed is weighing on poultry producer margins, the Brasilia bureau said.

"In the past 12 months, the average cost of broiler production increased by 34%, basically influenced by the prices of corn and soybean meal," the bureau said.

"Independent producers are being more affected by the shortage of corn than those integrated producers."

"In general, broiler producers intensified the use of wheat as an alternative to reduce high-priced corn."


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