Rising prices stimulate housing of breeding chicks

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Nykläckta kycklingar i trådkorg

Chicken prices showed an impressive increase during the month of August. In some regions, a kilogram of live chicken was close to BRL 4.00, an unprecedented price level in the Center-South. There are some factors that justify this movement. The main one is in the process of reopening the Brazilian economy in the second half of the year. Most states have eased their quarantine and resumed activities, logically maintaining restrictions and adopting strict sanitary measures.

Chicken exports in 2020 show a more discreet performance when compared to the other two proteins of animal origin of greater relevance, but the result remains satisfactory. Chicken exports were hampered by the decline in purchases from traditional importers, such as the countries of the Middle East, Japan, and South Africa, as a result of the pandemic. The trend is that the numbers improve in the last 4 months. The reopening process that is consolidating in Brazil also happens in these regions, which suggests a greater demand during the next few weeks. According to projection from Safras & Mercado, the expectation is that around 4.22 million tons will be exported, an increase of 5% in the volume shipped in comparison with 2019.

The picture of internal availability reinforces the trend of advancing chicken production. With the macroeconomic difficulties evidenced in 2020, there is a clear change in the pattern of consumption by the population. The preference is for more affordable products. In the meat industry, in particular, this preference is for chicken, cuts of beef forequarter, and eggs. Observing the perspective of improvement in domestic and international consumption, the industry has prepared itself, the housing of breeding chicks in July is a portrait of this positioning, reaching a record of 592 million head, with data from APINCO. According to Safras & Mercado, around 14.2 million tons of chicken must be produced in 2020, up 4% from 2019.

With this projection, the trend is that the domestic supply approaches 10 million tons in 2020, up 3.3% from 2019. The chicken industry tends to benefit for the rest of the year because it has more affordable prices. Moreover, as it has a shorter cycle compared to that of other proteins, and it is possible to expand or shrink supply in line with demand projections. In our next newsletter, the first supply and demand projections for 2021 for the main proteins of animal origin will be released.