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Report Highlights: 

Post forecasts broiler production to rebound by 3 percent in 2014 to 13.1 million metric tons as a result of lower feed costs and higher exports due to the depreciation of the Brazilian currency. The slow growth path in domestic demand is due to the high level of indebtedness of Brazilian consumers and higher competition from other meats, mostly beef.

Executive Summary:

Post forecasts broiler production to rebound by 3 percent in 2014. This increase will likely be driven by higher exports stimulated by the depreciation of the Brazilian currency and lower feed costs due to record soybean and corn crops estimated for 2013/14 crop year. Post sources also identify the high level of consumer debt in Brazil as a constraint to increase domestic demand. The outlook for turkey production and exports is for moderate growth next year.

Poultry, Meat, Broiler

Production: 

Broiler production is forecast to grow by 3 percent in 2014, as compared to Post’s revised downward production level in 2013. FAS Brasilia believes that a production estimate at 13.1 million metric tons in 2014 reflects the current expectations of producers to continue with a strategy to adjust supply and demand for boilers. Producers are likely to benefit from reduced production costs in 2014 due to estimated record soybean and corn crops combined with higher exports. The only constraint affecting next year’s forecast is the slowdown in the growth path of domestic consumption due to the high level of indebtedness of Brazilian consumers and higher competition from beef and pork. 

Post revised 2013 broiler production to 12.7 million metric tons, a drop of nearly two percent from our forecast at the beginning of the year, reflecting the problems faced by Brazilian producers with high feed costs during the first quarter of the year and their decision to cut production by 5 to 10 percent. 

Production Costs 

The cost of broiler production in 2013 is estimated to drop by 15 percent from last year’s level, while producer price will likely recover around 12 percent during the same period. If materialized, these prices will contribute to improve profit margins next year. These reference prices are for Parana state, the largest broiler producer in Brazil with a market share of nearly 28 percent of total broiler slaughter.

Consumption:

Domestic consumption of broiler meat in 2014 is projected to increase by two percent reflecting a continuing increase in the price of broiler (RTC) due to tight supply, high indebtedness of Brazilian consumers, and competition from beef and pork. 

Trade: 

Post forecasts broiler exports in 2014 to increase by 5 percent. The growth in exports is likely to be driven by a devaluation of the Brazilian currency and higher sales of whole broilers, in general and chicken parts to China and Hong Kong, in particular. Exports to new markets such as Mexico (Brazilian and Mexican officials recently completed a sanitary agreement enabling exports) are likely to begin during second half of 2013. Trade sources also expect greater broiler exports to the European Union, Egypt, Nigeria and Iraq. 

Brazilian exporters remain concerned with specific trade issues with major trading partners such as the Russian Federation (slow relisting of Brazilian poultry plants), Venezuela (payment defaults) and South Africa (application of antidumping tariffs of 62.92% on whole broilers and 46.59% on chicken parts) that continue to negatively affect performance. Brazilian exporters are also in the final stage of preparing support data for Brazilian officials to open a panel in the World Trade Organization (WTO) against Indonesia, which is resisting in opening their market for Brazilian broilers. 

During Jan-Jul 2013 total broiler exports reached 2.2 million metric tons, 3 percent lower than the same period in 2012. However, the value of broiler exports reached a record of US$ 4.5 billion, up 9.5 percent and a record for the period. The average export price increased by 13 percent, as compared to the same period last year and reached US$ 2,110 per metric ton. 

Major export markets for Brazilian broilers in 2013 remain the same as last year: Saudi Arabia, Japan and the European Union (UE-28).

Poultry, Meat, Turkey

Production: 

Turkey production is forecast to increase by nearly 3 percent in 2014, mostly driven by a continued growth in exports. Lower feed costs due to record soybean and corn crops are likely to improve producer’s margins. A slowdown in the growth path of domestic demand remains as the main constraint affecting production growth. 

Trade: 

Turkey exports are projected to continue to grow in 2014, mostly caused by the depreciation of the Brazilian currency. Exports are expected to increase to the European Union, Angola and Chile, among other markets in the Middle East

PARIS GRAIN DAY 2018

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