Brazilian broiler exports are expected to increase by 3 percent in 2013, driven by higher shipments of whole broilers, in general, and chicken parts to China and Hong Kong in particular, according to this week’s “International Egg and Poultry Review” from USDA’s Agricultural Marketing Service (AMS). The report is based on Foreign Agricultural Service GAIN reports. Trade sources expect higher exports to Egypt and Iraq.

Brazilian exporters currently have three major concerns affecting the outlook for broiler exports in 2013.  First, 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 on the cost of exports.  Second,  uncertainties derived from the world financial crisis, mostly in Europe, and its impact on importing markets will slow growth.   Thirdly, specific trade issues with major trading partners such as the Russian Federation, which is slowing the relisting of Brazilian poultry plants, Venezuelan payment defaults, and South Africa’s application of antidumping tariffs on Brazilian broiler of 62.92 percent on whole broilers and 46.59 percent on chicken parts, will continue to negatively affect performance, AMS said.

Brazil exported broilers to 152 markets in 2012, with nearly one-half  of those exports going to five markets–Saudi Arabia, Japan, Hong Kong, United Arab Emirates, and China. Markets with major increases in 2012 included Egypt, which rose from 72,075 metric tons in 2011 to 119,326 tons in 2012, and South Korea, which grew from 25,562 tons to 65,296 tons during the same period.

Brazil’s broiler production is expected to recover and grow 2 percent  in 2013 after a 1 percent decline in 2012. General opinion among trade sources is that Brazil’s economic growth is expected to recover from the poor result of 2012 and that estimated record Brazilian soybean and corn crops should help to mitigate the impact of rising feed costs. However, sources also identify other factors that can adversely affect the poultry sector this year.  These factors include squeezed profit margins for producers and processors because rising feed costs may continue through the first half of this year;  the high level of consumer debt in Brazil may also undercut domestic demand of animal proteins in general; and broiler exports are forecast to increase slowly because of the continued uncertainties in the world economy.

The increase in the cost of broiler production in 2012 is estimated at a record rate of nearly 40 percent, while the producer price during the same period increased by 46 percent. These reference prices are for Parana state, the largest broiler producer in Brazil with a market share of nearly 28 percent of total broiler slaughter. The increase in the cost of production is basically due to higher feed costs, mostly corn and soybean meal, the report said.