Brazilian broiler exports next year are expected to “rebound,” according to USDA’s Foreign Agricultural Service’s (FAS) Poultry GAIN report. FAS forecasts 2013 exports at 3,582,000 metric tons, 3.0 percent above the 3,478,000 tons estimated for 2012, which is 1.0 percent above the 3,443,000 tons in 2011. The growth in exports is likely to be driven by higher sales of whole broilers, in general, and chicken parts to China and Hong Kong in particular. Trade sources also expect higher exports to Egypt and Iraq.

Brazilian exporters currently have three major concerns affecting the outlook for broiler exports in 2013. Despite the recent devaluation of the Brazilian currency, higher production costs of broilers during the second half of 2012 and first half of 2013 are expected to impact the cost of exports.  In addition, uncertainties derived from the world financial crisis, mostly in Europe, and its impact on importing markets will slow growth.  Also, specific trade issues with major trading partners such as the Russian Federation (slow relisting of Brazilian poultry plants), Venezuela (payment defaults), and South Africa (application of anti-dumping tariffs on Brazilian broiler of 62.92 percent on whole broilers and 46.59 percent on chicken parts) will negatively affect performance. South Africa was the seventh largest market for Brazilian broiler exports in 2011 with 195,416 metric tons.

Broiler export markets with major increases during first-half 2012 were South Korea (265 percent), followed by Egypt (157 percent) and China (42 percent). Brazilian meat inspection officials expect to see more Brazilian plants added to the list of eligible exporters to China before the end of the year.

Markets with major declines were Kuwait (40 percent) followed by Bahrain (31 percent), Venezuela (26 percent), the European Union (17 percent), Japan (16 percent) and the Russian Federation (14 percent). The decline in exports to Russia derived from the unresolved issue of delisted Brazilian poultry plants by Russian officials. The drop in exports to Venezuela is alleged to an increase in local broiler production in that country, but trade sources also indicated policy restrictions against Brazilian broiler imports were in place.

FAS expects Brazilian broiler production to increase 2.0 percent in 2013, compared with a revised downward production level in 2012. FAS  production estimate at 13.0 million tons reflects the current expectations of trade sources with improved economic conditions next year and estimated record soybean and corn crops. In addition, the federal government will make use of several domestic support programs and will extend credit payment deadlines to assist broiler producers to reduce the impact of rising feed costs.

Certain concerns that can impact next year’s production forecasts are that the current high grain and oilseed prices have squeezed producers’ profit margins this year and eventually will result in some small independent producers going out of business. This situation may continue throughout the first quarter of next year.  In addition, a slowdown in the path of the growth of domestic consumption because of the high level of indebtedness of Brazilian consumers may reduce consumption of animal protein. Also,  current disappointing export performance because of the international economic uncertainties derived mostly from the European Union’s financial crisis and some trade issues, mostly with Russia and South Africa, could undercut the forecast, the FAS report concluded.