Brazil must expand housing of breeding chicks in 2023

131
chicks

The Brazilian poultry industry acted proactively to adapt to the challenges imposed by the market, in 2022 the great challenge was the inflated cost structure, with animal nutrition appearing as the most serious problem to be solved. The housing of breeding chicks was also impacted by the need to discard matrices between this and last year. Anyway, the sector managed to operate with very satisfactory margins despite the challenging moment.

From the perspective of demand, 2022 was a year of strong domestic demand for chicken, something understandable given the loss of purchasing power of the Brazilian population. The marketing logic pointed to the preference for products that cause less impact on average income, exactly the case of chicken and eggs within the meat sector. For 2023, with another year of poor growth in economic activity in the country, the trend is for the maintenance of these dynamics.

International demand is also generous for Brazilian chicken, with a strong export pace throughout 2022. The advance of Avian Influenza in the northern hemisphere has offered several opportunities for Brazilian chicken. The scenario of leaner production in countries with important production, added to the heated demand, raised the international prices of chicken, a situation that led to strong growth in export earnings in the country.

In this environment, it is quite logical that the operating margin grows, even with cost advances in most parts of the country. For the second semester, the expectation is still of good demand amid difficulties in expanding supply given the shortage of replenishment (chicks and fertile eggs), which still work with prices at historic highs. This is an important constraint for productive advances over the year.

Still in 2022, the trend is for less inflated costs in the second half of the year, considering the good volume of second-crop corn this season. Therefore, it is not wrong to envision an increase in the operating margin for the rest of the year, and the export account becomes even more advantageous with the prospect of a more devalued real during the second quarter.

For 2023, there will be a recovery of production capacity, allowing production advances, and demand will not be a problem. In this environment, Brazil is expected to house around 6.9 billion breeding chicks, according to an estimate by SAFRAS & Mercado. Judging by the movements of the global economic policy, the trend is for a less inflated cost structure, with a potential decline in fuel prices. Animal nutrition will still depend on the weather for the summer corn and soybean crops, once again the market works with the La Niña phenomenon, which traditionally results in production problems.

Regarding exports, the scenario remains very favorable, with a trend of shipments of 4.75 million tons, also with figures from SAFRAS & Mercado. Brazil will continue with some tranquility in the global leadership of exports of this protein. The lack of control of Avian Influenza on farms in Europe and the United States will continue to be an important factor in keeping the country in a privileged situation.

From the point of view of production, there must be progress, with the country reaching the mark of 14.5 million tons. Domestic availability in this environment will be 9.8 million tons. Chicken will continue to act as a relevant pillar for the food security of the Brazilian population, which will have a slow process of recovery of consumption power next year.

From the point of view of competition, the potential increase in the beef supply will be a relevant factor in the formation of prices for substitute proteins, starting with chicken. However, even with the potential decline in the prices of the population’s preferred protein, chicken will remain very competitive in the domestic market. It is worth mentioning that in yet another year of slow growth in economic activity, the tendency is for Brazilian agribusiness to remain focused on exports.

Follow the Safras Agency on our website. Also follow us on our Instagram and Twitter and stay on top of the main agribusiness news!

Copyright 2022 – SAFRAS Latam