Brazil’s chicken housing follows trend of expansion in 2020

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Nykläckta kycklingar i trådkorg

Porto Alegre, October 9, 2020 – The housing of breeding chicks continues its growth trend in 2020. The industry envisions an excellent opportunity in this second semester, evaluating the strong upward movement of competing proteins, which drives to the increase in the consumption of less expensive meat. Generally speaking, the average consumer usually opts for more affordable products in years of crisis. For the meat industry, in particular, this preference falls upon chicken and eggs. Therefore, chicken tends to gain even more space in the domestic market as prices of competing proteins rise.

The attached graph expresses precisely this correlation, pointing to the exchange ratio between chicken and other wholesale cuts in the main consumer center of the country, São Paulo. It can be seen that chicken is nearly twice more affordable than pork. Regarding beef forequarter, chicken is over 2.45 times more competitive. Regarding hindquarter, competitiveness is even greater, with chicken being approximately 3.3 times more affordable.

In the international market, there must be the resumption of a good pace of shipments bound for relevant importers of Brazilian chicken, including countries in the Middle East and Japan. Therefore, chicken tends to find a good bullish moment over the last quarter, mainly in the domestic market. The housing numbers point to the understanding of this premise in all chicken farming, leading to a good volume of supply, easily meeting internal and external demand. In August, 568.5 million head were housed, an increase of 2% over 2019. From January to August, around 4.44 million head were housed, up 3.8% from the same period last year.

In the last few days, there were noises about the costs of animal feeding, the prices of corn and soymeal are at high levels, resulting in the detachment from the prices of other ingredients such as flours of animal origin, DDG, and sorghum. The possibility of importing increased to support the domestic market. Reducing extra-Mercosur import tariffs will not bring major changes in the domestic market, since the exchange rate parity keeps import prices prohibitive. The only alternative for the chicken industry is passing on this additional cost along the production chain, keeping the operating margin at interesting levels.

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