Brazilian broiler exports are forecast to increase by 5 percent in 2012 to a record level of 3.550 million metric tons, according to USDA’s FAS GAIN report on poultry from Brasilia. Brazil’s growth in exports is likely to be driven by higher sales to the Middle East and a continued increase in exports to Brazil’s traditional markets such as Japan, Saudi Arabia, and the European Union.

The strategic focus of the largest Brazilian poultry processor and exporter (BRF) is the Middle East where the company announced a total investment of U.S. $120 million to build a facility in the United Arab Emirates with a total processing capacity of 80,000 tons.  The strategy in the Middle East, which accounts for nearly 32 percent of the company’s exports, is to produce further processed broiler products.  Market promotion efforts will continue in their traditional markets in the Middle East, Europe, and Russia, but it will incorporate market activities in newly-opened markets in Malaysia, Indonesia, and Africa.

Brazilian poultry exports will have some constraints in 2012.  In addition to the valuation of the Brazilian currency and the impact of the current debt crisis in Europe and the United States, there are some specific concerns with Russia and Venezuela.   The unresolved issue of the de-listing of Brazilian plants (beef, pork, and poultry) by Russian officials is a major issue between the two countries, affecting the 2011 exports, but with an estimated negative impact in next year’s exports, as well.  Venezuela has become an unstable market for Brazilian meat exporters in general mostly because of delinquent payments.

FAS revised trade data for 2011 with an increase of more than 6 percent in the volume of broiler exports, mostly because of higher exports to Saudi Arabia, Japan, Hong Kong, China and the European Union.  At the same time, the value of Brazilian broiler exports in 2011 will likely increase by over 20 percent, reflecting a major increase in the average export price of chicken from U.S. $1,660 per metric ton in 2010 to U.S. $2,020 per metric ton in 2011, the report said.

Feed prices are likely to remain stable during 2011-12 with estimated record soybean and corn crop, FAS reported.  Brazil’s new crop plan announced by the federal government makes available U.S. $67 billion in subsidized funds to boost production of grains and oilseeds during crop year October 1, 2011 to September 30, 2012.  Also, Brazil’s corn crop is comprised of up to 75 percent biotech grains, which will result in increased yields.  In 2011, some broiler producers also began to use sorghum as an alternative feed source for high-priced corn. Although this trend is expected to continue in the future, the substitution is not expected to displace traditional feed sources, and it is more focused on non-vertically integrated poultry producers outside of the main producing areas.

FAS estimated broiler costs in the Sao Paulo region for January-June 2011 at $1.11 per pound, ready-to-cook weight.  This cost compares with 92 cents in 2010, 55 cents in 2009, and 58 cents in 2008.  The report is available from FAS’s Web site.