813 views 2 commentsupdate:Jan 30, 2009

The storm has arrived in Brazil

Gordon Butland
After a few very profitable months for the Brazilian poultry industry during which they were able to pass on price increases allied to reasonable feed costs. This "lull" is now being shattered from an unforeseen direction.

After a few very profitable months for the Brazilian poultry industry during which they were able to pass on price increases allied to reasonable feed costs. This "lull" is now being shattered from an unforeseen direction.
European wheat problems are provoking a significant purchase of Brazilian GMO (Genetically Modified Organism) free corn with a huge premium over the Chicago price.
Using replacement costs Brazil live-bird costs will be higher than the USA, although still well below European levels.
As it will be difficult to pass on more significant price increases both locally and internationally, profitability will suffer. This situation shows how interconnected the global markets are and how difficult it is to predict where the next "event" (good or bad) will come from.

2 comments

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    Dr.Asif Mehboob Butt

    Yes and this is the same the poultry producers face in pakistan, every now and then.To quote just a single example, the prices of Feed has risen upto 30% over the last year, the price hike can't be passed to the end user and hence, the profitability has suffered a lot!

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    Rayan A. Haydar

    The Revenues from chicken exports in Brazil have increased, totaling 313,000 tons in October, 21% up on the same month in 2006. Revenue totaled US$ 508 million, up 59%. This indicates that exports may close by end of 2007 at 3.1 Million tons with revenue of US$4.5 billion, a record for the sector. Brazilian chicken production is expected to rise by 5.3% next year, to 10.68 Million tons according to the Executive director of the Brazilian Poultry Farming Union (UBA).
    It is projected that 5.37 billion head of chicken will be slaughtered; 5.4% more than 2007. (Average slaughter of 447.5 million birds per month)
    Exports are forecasted to grow between 5% and 10% next year, reaching 3.435 Million tons.
    rise in corn prices has also impacted prices for chicken , as it is the main component in feed for this segments. The average price per tons of chicken exported by Brazil rose to US$1,463 in October, compared with US$1,164 in October 2006. The prices are not expected to drop & as long as feed prices are increasing, producers are obliged to increase their prices. Eventually any price has a certain elasticity but as long as the demand is increasing the prices will not drop.

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