Falling chicken prices and rising costs result in sharply lower revenue in early 2021

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Porto Alegre, Januery 13, 2021The record housing of breeding chicks last October reaches the market between the months of January and December, exerting great supply pressure. Live chicken prices are declining in much of the country. Wholesale shows some decline, albeit less aggressive. The average consumer still chooses chicken as the main protein of animal origin, given its less prohibitive cost when compared to pork and especially beef.

However, animal feeding costs are skyrocketing at this time, with very sharp prices for soymeal and mainly corn. This kind of movement puts pressure on the operating margin of the activity. However, there is not much to be done about costs, particularly in the case of corn, whose summer area is quite smaller in 2021. Moreover, there are crop losses in Rio Grande do Sul and Santa Catarina. One of the options for getting corn in the first semester is importation, but some complications occurred in the first week of the year:

– Devaluation of the real. As previously discussed, the dollar is operating close to BRL 5.40. Even though this movement increases the competitiveness of Brazilian exports, it also makes corn imports more expensive;

– Ban on exports in Argentina until February. The Argentine government chose to block exports of some commodities, including corn. So, Brazilian consumers will only be able to buy significant volumes in the United States when this measure is revoked.

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