Broiler production in Brazil this year is now estimated to be 13,250,000 metric tons, 3.0 percent above the 12,863,000 tons in 2011, according to a USDA Foreign Agricultural Service (FAS) poultry GAIN report last month from Brazil. In the previous poultry GAIN report from Brazil, FAS expected the 2012 increase to be 5 percent over last year.
FAS explained that its latest production estimate was adjusted to reflect the views of industry leaders of the world economic uncertainties derived from the European Union financial crisis and its impact on Brazilian broiler export markets. In addition, the production growth has slowed because of an overvalued Brazilian currency and restrictions from trade partners. Another important factor is a slowdown in the rate of growth of domestic consumption combined with higher costs of production due to higher corn prices. In 2011, broiler production is now estimated at 12,863,000 tons, 91,000 tons below the previous estimate but 4.5 percent more than the 12,312,000 tons in 2010.
In addition to its downward revision of broiler production, FAS also revised downward from 5 to 3 percent its outlook for broiler exports in 2012. The growth in exports is likely to be driven by higher sales of whole broilers in general, and chicken parts, in particular, to China and Hong Kong. Trade sources told FAS they expect higher exports to Egypt and Iraq. Nonetheless, Brazilian exporters have currently three major concerns affecting the outlook for broiler exports this year:
- The continued overvaluation of the Brazilian currency, although this factor did not prevent record exports last year.
- Uncertainties derived from the world financial crisis, mostly in Europe, and its impact on importing markets.
- Specific issues with major trading partners such as the Russian Federation (slow re-listing of Brazilian poultry plants) and South African (application of anti-dumping tariffs on Brazilian broilers).
In 2011, the total quantity of broiler exports, including chicken feet and paws, reached 3.7 million metric tons, an increase of 3.3 percent from 2010. However, the value of exports increased by 22 percent to $7.6 billion because of the increase in the average price of broiler meat in the world market.
Broiler export markets with major increases in 2011 were China, up 61 percent; followed by Angola, up 38 percent; and Iraq, up 28 percent; while markets with major declines were the Russian Federation, down 58 percent and Egypt, down 42 percent. The decline in exports to the Russian Federation was a result of significant number of Brazilian poultry plants de-listed by Russian officials, while the decline in Egypt was because of logistical problems associated with the political instability in the country last year.
