Brazil’s export suspension on chicken products to boost domestic supply, price: experts
Chinese poultry industry is expected to see more positive outcomes rather than any negative impact from a recent suspension of poultry exports announced by Brazil, Chinese industry analysts and insiders said on Monday, indicating the latest change on the supply side is expected to boost domestic supply and shore up a weak market.
Brazil, the world largest chicken exporter, has announced the suspension of the exports on some poultry products, effective on July 18, following a case of viral disease was detected in a chicken farm in the state of Rio Grande do Sul in Southern Brazil, the country's agricultural ministry said on Friday.
The restrictions range, depending on the destination country, from all Brazilian poultry exports to products only from Rio Grande do Sul, Reuters reported, citing the Brazilian agriculture ministry.
The restrictions affect sales to 44 nations including China, Argentina, the EU, Japan and Saudi Arabia, the ministry said.
Industry insiders said that the suspension of the Brazilian poultry products will have minimal negative impacts to Chinese market, even though the South American country holds a relatively large share among overseas supplies. Instead, it may help shore up the supplies of the alternative home-made products.
Chicken feet and chicken wings account for a significant proportion in Brazil's agricultural exports to China, and with the export of these products suspending due to the virus, the reduced supply, combined with the boost from seasonal demand in China, may support the stronger price trend of the corresponding products in the domestic market, Sun Yanan, an industry analyst from bulk commodity information platform Sci99.com, told the Global Times on Monday.
As the world's largest poultry meat exporter, Brazil's poultry exports increased by 6.6 percent year-on-year in 2023 to 5.138 million tons. China is the main buyer of Brazilian poultry meat, according to media reports.
In the first half of the year, Brazil exported 101,800 tons of frozen chicken wings, accounting for 74.77 percent of China's total imports. During the same period, the country also exported 90,300 tons of frozen chicken feet, accounting 42.79 percent of China's total imports of these products, according to Sun.
Given that Brazilian products have consistently ranked first among China's imported products for many years, with imported chicken feet and frozen chicken wings together accounting for more than 40 percent of China's total imports.
"This news is expected to lead to a stronger price trend for the chicken by-products in the short term," Sun noted.
There has been a widespread increase in prices across the chicken supply chain as the market demand recovers. The news of Brazil restricting exports has added additional fuel to the price rise.
For example, on Friday, the price of live chickens in East China's Shandong Province and North China's Hebei Province rose to 3.7-3.75 yuan per jin (0.5 kilograms), up about 10 percent from the two-and-a-half-year low of 3.39 yuan per jin on June 10.
The suspension of the corresponding products has just been put in place, it will take time for the market to digest the possible impact. However, it should be considered a rather positive news to the domestic market suppliers, an employee with Fujian-based chicken meat company Sunner Group told the Global Times on Monday.
The company's production capacity has been rising and it can accommodate the change in market demand, the person said.