Poultry and pork production will be lower this year, says ABPA

13/12/2018

Data collected by the association indicate production more adjusted to domestic and international market demand

Brazil should end the year with more adjusted poultry and pork production, projects the Brazilian Animal Protein Association (ABPA). The information was presented at a press conference held this Thursday (13), in São Paulo.

According to a survey carried out by the association, the production of chicken meat should total 12.82 million tons this year, 1.7% less than the 13.05 million tons produced last year. The segment’s exports will end the year with a total of 4.1 million tons, 5.1% less than the 4.32 million tons exported in 2017. With an internal supply of 8.73 million tons, consumption per capita of chicken meat tends to grow 0.63%, reaching 41.8 kilos in 2018.

The production of pork meat should present a retraction of 3.2%, reaching 3.63 million tons. In 2017, 3.75 million tons were produced. The segment’s shipments are expected to total 640 thousand tons, 8% less than the 697 thousand tons exported in 2017. In view of an internal offer of 3.07 million units, the per capita consumption of pork should be 14.35 kilos in this 2.6% less than the consumption registered in 2017.

In a positive flow, egg production is expected to increase by up to 10% in 2018 compared to the 39.9 billion units produced in 2017, reaching 44.2 billion units. The segment’s exports will surpass 10.8 thousand tons, in a growth rate 80% above that of last year. Per capita consumption of eggs will reach the historic mark of 212 units, which exceeds the rate registered last year by 10.4%.

JANUARY-NOVEMBER EXPORTS: total chicken meat exports in the first nine months of the year reached 3.748 million tonnes, 6.3% lower than the 3.999 million tonnes shipped between January and November 2017. Sales of chicken meat generated revenue of US $ 5.99 billion in the period, a balance 10.8% lower than the US $ 6.712 billion made in the previous year.

Total pork shipments reached 589.2 thousand tons in 2018, a volume 8.4% lower than the 643.5 thousand tons shipped between January and November 2017. The balance in revenue in the period is US $ 1.105 billion, a figure 26.8% lower than that recorded in the first 11 months of 2017, with US $ 1.509 billion.

In the case of the egg sector, the total exported reached 9,991 thousand tons, a volume 83.9% higher than the 5.434 thousand tons shipped in the same period of 2017. In revenue, sales reached US $ 15.1 million, 101.9% above the US $ 7.4 million realized between January and November 2017.

RELEVANT FACTORS OF THE YEAR: According to ABPA President Francisco Turra, among the positive factors that occurred throughout 2018, are the enabling of 26 new plants for chicken meat exports to Mexico, making the Cambodian market viable for the Brazilian poultry sector and the opening of the South Korean and Indian markets for pork. Russia, after 11 months of negotiation, also reopened its market for the pork sector.

Another relevant point of 2018, according to Turra, is the current health crisis in China. “The historic slaughter of animals in the largest pork producer in the world should increase the demand for meat from countries that today supply the Chinese market. The market information indicates that a gap of about 4 million tons (according to information surveyed by Consultoria Asia Agro Aliance), as a direct impact to outbreaks of African swine fever ”, he explains.

Still on China, according to ABPA’s executive director, Ricardo, Santin, negotiations between Chinese and Brazilians for the construction of a Price Undertaking (PU) agreement for Brazilian chicken meat exports are in the final stages, which should suspend the provisional anti-dumping duty surcharges applied by China. “The PU proposals were delivered by the companies to the Chinese Ministry of Commerce this week. Important factor: even with the application of tariffs, chicken meat exports to China should end the year 10% higher than those made in 2017 ”, he points out.

This year, relevant factors are also the delisting of 20 plants (eight of which continued to export fresh chicken meat without added salt) by the European Union, and the change in slaughter criteria for the import of poultry meat by Saudi Arabia. In the latter case, according to Santin, the changes with the readjustment of the market resulted in a retraction of more than 100 thousand tons in Brazilian exports – one of the markets that most reduced imports in 2018.

Also among the relevant factors of the year are the 10 days of stoppage on Brazilian roads, with the truckers’ strike. Millions of birds died during the 10-day strike. The impacts exceeded R $ 3.1 billion – R $ 1.5 billion of which cannot be recovered. In addition to the losses, the strike brought freight charges to the table. For health reasons, the poultry, eggs and swine sectors depend on so-called dedicated transport, which are loyal and have short distances. With the new table, in general the logistical cost of the sectors presents an average increase of 35% – reaching close to 80% in some modalities, such as feed transport.

Regarding production costs, the prices of corn and soybean meal – which represent up to 70% of productive costs – were the main influencing factors. Compared to 2017 data, the price of corn was up to 50% higher, and soybean meal, up to 40%. “The price of inputs in the domestic market boosted business with grain producers from neighboring countries, such as Argentina and Paraguay. Product supply forecasts point to a year in 2019 with a lower cost of production compared to the previous year ”, analyzes ABPA’s president, Francisco Turra.

In this context, it is worth noting that the exchange rate was favorable to Brazilian exports, especially over the second half. “Considering factors such as production costs and international product prices, the dollar x real ratio is favorable to the productive sector at levels above R $ 3.50”, concludes Santin.

EXPECTATIONS FOR 2019: according to ABPA, in relation to chicken meat, the housing of matrices in 2018 indicates a moderate supply of chicken meat in 2019. The expectation is that the production rate of next year will be 1.39% higher, reaching production of 13.2 million tons.

For pork, the market will be influenced by the expectation of an increase in international demand for the product, especially from China (with the reduction of crops, due to outbreaks of African swine fever) and Russia (recently reopened to Brazil).

There is great expectation, too, regarding the new government, says Turra. In late November, ABPA presented to the Transition Group of the future Presidency of the Republic a document with demands for poultry and swine. Among the points addressed in the document, were the reduction of bureaucracy in the process of qualifying refrigeration plants, the end of the establishment of minimum freight; the improvement of the logistics infrastructure, the strengthening of road safety against cargo theft and the achievement of international agreements.

ABPA will also define new work strategies for the coming year. This month, the association started the 500K Project, a strategic plan together with exporting companies and EY’s consultancy. The objective is to strengthen operations in strategic markets for the sector, with the goal of reaching an average export volume of poultry and pork meat of around 500 thousand tons per month.

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