BRAZIL - Brazil's poultry meat production for 2016 is now expected to increase by 3 per cent in 2016 to 13.5 million metric tons (MT), after record production levels of 13.1 million MT were reached last year, according to the latest report from the US Department of Agriculture's Foreign Agricultural Service (USDA-FAS).
The increase in production is due to booming broiler exports, which is mostly due to the depreciation of the Brazilian currency, combined with new market opportunities.
Higher demand for Brazilian product around the world is also a result of avian influenza outbreaks in other producing countries.
In addition, Brazilian negotiators opened two new markets for poultry in 2015 – Pakistan and Myanmar, and were successful in expanding the list of poultry plants for other markets such as Russia, China, Malaysia and Mexico. Brazil is now able to exports broiler meat to 158 countries, although nearly 70 per cent of all poultry exports are concentrated in 10 countries.
The slow growth in domestic consumption is due to the current economic recession in the country and higher inflation.
However, despite the recession, drop in GDP estimated at 3.8 per cent in 2015, two-digit inflation rate of 10.67 per cent and loss in consumer purchasing power, the poultry sector benefited from high-priced beef in the domestic market. This led to a move by consumers to cheaper chicken products.
This situation is expected to continue in 2016, but at a slower pace since other market constraints remain such as rising inflation and loss of consumer purchasing power, combined with high indebtedness of Brazilian consumers, which prevents any further increase in domestic consumption of animal proteins in general.
For 2016, the poultry industry remains as the bright spot of the animal protein sector, but is currently facing rising feed costs which may temper production growth in the first half of the year.
The main constraint that can affect producer margins in the 2016 forecast is uncertainty regarding feed costs, as Brazilian corn exports are currently booming and prices have increased in the past 12 months in the most important poultry producing areas of the South by nearly 50 per cent for corn and 18 per cent for soybean meal.
In addition, poultry producers are still facing the substantial increase in energy costs of 2015.
The Brazilian government, to reduce domestic feed prices for feed, began in early February to promote corn auctions at subsidised prices for a total of 500,000 metric tons of government-owned corn stocks until the new 2016 corn crop enters into the market and stabilises prices.
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