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Case study: Brazilian poultry exports booming

Brazil’s poultry production is forecast to rise 3% in 2016 to 13.5 million metric tonnes (MT) beating last year’s record production level of 13.1 million MT. Booming broiler exports due to the depreciation of the Brazilian currency, combined with new market opportunities are the main drivers behind this growth.

Broiler production in Brazil exceeded all expectations in 2015 with a 4% yearly increase. Despite an economic recession, a drop in GDP estimated at 3.8% in 2015, 2-digit inflation rate of 10.67% and loss in consumer purchasing power, the poultry sector benefited from high-priced beef in the domestic market.

Record broiler exports

A devaluation of the Brazilian currency of 53% in the past 12 months, ending in January 2016, makes the Brazilian product highly competitive in the world market, resulting in record broiler exports. With chicken meat remaining the cheapest animal protein in Brazil, the poultry industry remains as the bright spot of the animal protein sector.

Although current market conditions in Brazil favours a shift from high-priced beef to lower-priced chicken, rising inflation and loss of consumer purchasing power means that no further increase in domestic consumption is expected in 2016.

High demand for Brazilian poultry

The forecast production level at nearly 13.5 million metric tonnes in 2016, above the record levels of 2015, reflects the current expectations of producers to continue with a strategy to adjust supply and demand for boilers and to respond to higher world demand for the Brazilian product, especially because of the continued impact of the Avian Influenza in several producing countries.

The main constraint that can affect producer margins in the 2016 forecast is the uncertainty regarding feed costs, as Brazilian corn exports are currently booming and prices have increased in the past 12 months in the most important poultry producing areas of the South by nearly 50% for corn and 18% for soybean meal. To reduce domestic feed prices, earlier this year, the Brazilian government began to promote corn auctions at subsidised prices for a total of 500,000 metric tonnes of government-owned corn stocks until the new 2016 corn crop enters into the market and stabilises prices.

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Broiler export growth set to continue

Broiler exports from Brazil exceeded expectations in 2015 and is estimated to continue to grow in 2016 by nearly 8% over last year's record. The devaluation of the Brazilian currency combined with the continued impact of the Avian Influenza in several producing countries has substantially increased the demand for Brazilian poultry.

In addition, Brazilian negotiators opened 2 new markets for poultry in 2015 – Pakistan and Myanmar, and were successful in expanding the list of poultry plants for other markets such as Russia, China, Malaysia and Mexico. Brazil is now able to export broiler meat to 158 countries, although nearly 70% of all poultry exports are concentrated in 10 countries.

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