Brazilian chicken farming has better prospects for a reaction

200

Porto Alegre, February 9, 2022 – The year 2022 is also very challenging for the Brazilian chicken industry. However, there is a greater ability to escape the current inflated cost structure compared to pig farming. The following elements indicate the greater resilience and recovery capacity that the chicken industry must have throughout the year, either from the point of view of supply or demand.

As is known, nutrition costs are a recurring concern at this time. The price structure is quite inflated in the first two months, as a consequence of the recent behavior of corn and soymeal prices in the domestic market. Some strategies can be adopted by the chicken industry to mitigate these effects, starting with the reduction in the housing of breeder chicks. As it is a short-cycle activity, there would be capacity for this strategy to be efficient in the first half of the year.

The decline in production would help the market in different ways. The first aspect is the natural retraction in corn consumption with the lower number of housed chicks. Moreover, lower availability of supply in the domestic market needs to be considered, which in itself would allow prices to rise more consistently. In other words, the decline in breeder chick housing would allow an increase in the activity’s operating margin.

From the point of view of demand, the market remains promising for chicken, first because, from the point of view of exports, Brazil is faced with a privileged condition, considering the absence of serious health problems, such as bird flu, which keeps spreading across Asia, Europe and more recently North America. Brazil should surpass the mark of 4.5 million tons in 2022.

In the domestic market, the environment is also favorable. The year 2022 will be marked by a slow advance in economic activity. In addition, there has been a significant loss of the population’s purchasing power in recent months. In other words, the consumption pattern designed for 2022 indicates the maintenance of the strategies of option for more affordable proteins, precisely the case of chicken and eggs.

In other words, even though the environment is challenging, the chicken industry has better conditions to recover over the year. All it needs is a supply adjustment to overcome the crisis triggered by the rising cost of inputs. It is important to point out that the corn supply tends to normalize only with the entry of the second corn crop in the market, that is, there are at least four more complicated months ahead.

SAFRAS Latam