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Overview of This Week’s Poultry Industry News

10 May 2012

ANALYSIS – Brazilian broiler meat production is estimated to reach 13.3 million metric tons this year as a result of domestic demand and a small recovery in exports, writes Jackie Linden, in this week’s focus on Brazil. Adverse weather conditions in the south of the country have bene pushing up prices of maize and soybeans. More than 500 poultry producers there are now certified regarding international food safety and sustainability criteria. JBS has announced it will lease Frangosul’s plants in Brazil.

According to a USDA report, Brazil’s broiler meat production is influenced by the world economic uncertainties impacting some major export markets, as well as issues with some trade partners. Other factors include an over–valued Brazilian currency, a slow–down in the growth rate of domestic consumption and higher costs of production due to higher maize prices.

Broiler meat exports are projected to rise by three per cent. 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 also expect higher exports to Egypt and Iraq in 2012.

A cloud on the horizon to hold back the growth of Brazil’s poultry industry is that recent severe weather and crop failures in the south of the country, combined with increased consumption demand, are driving up corn (maize) and soybean meal prices in Brazil, according to Informa Economics FNP.

Already in March, a local index that measures the change in cost of production of broilers in the state of Paraná, reached 142.01, more than four per cent above the February figure. The organisation, ICPFrango/Embrapa, attributed the rise to a temporary increase in feed ingredient costs following bad weather in the south of the country.

There has been a recent jump in the number of certified chicken producers in Brazil. There are now 519 GLOBALG.A.P.–certified chicken producers in Brazil, with an annual production of over 500,000 tons of chicken, following a series of workshops and field trials held throughout 2010 and 2011 and sponsored by McDonald’s Europe along with a number of other domestic and international partners..

Norbert Rank, European Quality Lead (Poultry), of McDonald’s Europe and Chairman of the GLOBALG.A.P. Stakeholder Committee on Animal Welfare, said: “During 2011, we were working with our Brazilian poultry suppliers to implement the international food safety and sustainability criteria of the GLOBALG.A.P. Standard. McDonald’s Europe is very pleased with the outcome of the project as it helped us to strengthen our relations with our suppliers."

Turning to news from Brazilian poultry producers and processors, JBS is to lease Frangosul’s plants in Brazil. Frangosul was controlled by the French group, Doux.

One of the country’s other top companies, Brasil Foods (BRF), announced its first quarter results, which included a 5.3 per cent increase in revenue and net income of 153 million reals (BRR). While some key export markets were challenging, domestic sales were up 11 per cent.

BRF also announced in the last week that is has entered into a three–year US$500–million revolver credit facility.

Turning to news of other countries, an economist has forecast that the recovery in the US economy may be slowing down.

Speaking at the American Meat Institute Expo and conference in Dallas, economist Eric Trachtenberg from McLarty Associates said that forecasts showed a potential growth in the US of between 1.9 and 2.1 per cent for the current year. However, he added: “It looks like the trend is down again. The recovery seems to be petering out.”

He said there were concerns that there could be a financial shock of between 3.0 and 3.5 per cent of GDP looming for the US economy, and this could stop growth altogether. However, global GDP is expected to grow at 3.5 per cent, based largely on the expansion in the developing markets of China, Brazil, India, Mexico and even sub-Saharan Africa, he said.

However, he said that oil prices are expected to stay high and soy bean prices are expected to be rising driven particularly by demand in China. There could be rises of $10 to $12 per bushel for soybeans and $4 to $5 for maize between this year and 2021, according to Mr Trachtenberg.

Finally, turning to bird flu news, there has been new outbreaks of highly pathogenic form of the disease on a farm in Tripura state in north-east India (H5N1) and on an ostrich farm in Western Cape in South Africa (H5N2). Bangladesh has banned the sale of chicken on Mondays to prevent another outbreak of bird flu there.

Jackie Linden - Senior Editor

Jackie Linden - Senior Editor





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