Brazilian poultry production on the rise

Despite revised downward broiler production estimates for 2012 to 13.3 million metric tons, Brazil still looks to set a new record up 3% from 2011. The increase in production is mostly driven by domestic demand and a small recovery in exports.

Broiler production is now estimated to grow by only 3% in 2012, as compared to an initial forecast of 5% growth, according to figures in a recent USDA Gain Report. Production estimated at 13.3 million metric tons reflects the current view of industry leaders given the world economic uncertainties derived from the European Union financial crisis and its impact on Brazilian broiler export markets.

Domestic consumption
In addition, the production growth has slowed due to an overvalued Brazilian currency and restrictions from trade partners. Another important factor is a slowdown in the rate of growth of domestic consumption combined with higher costs of production due to higher corn prices.

Domestic consumption of broiler meat in 2012 is projected to increase by 3% to 9.9 million metric tons, which is below the initial forecast of 10.1 million metric tons. The growth in exports in 2012 is likely to be driven by higher sales of whole broilers in general, and chicken parts, in particular, to China and Hong Kong. Trade sources also expect higher exports to Egypt and Iraq.

Broiler exports
Nonetheless, Brazilian exporters have currently three major concerns affecting the outlook for broiler exports in 2012: 1) the continued overvaluation of the Brazilian currency, although this factor did not prevent record exports last year; 2) uncertainties derived from the world financial crisis, mostly in Europe, and its impact on importing markets; and 3) specific issues with major trading partners such as the Russian Federation (slow relisting of Brazilian poultry plants) and South Africa (application of antidumping tariffs on Brazilian broiler of 62.92% on whole broilers and 46.59% on chicken parts). South Africa was the 7th largest market for Brazilian broiler exports in 2011 with shipments of 195,416 metric tons (PWE).

In 2011, the total volume of broiler meat exports, including chicken feet and paws, reached 3.7 million metric tons, an increase of 3.3% from 2010. However, the value of exports increased by 22% to US$ 7.6 billion due to the increase in the average price of broiler meat in the world market.

Source: USDA Gain Report