THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
POLICY
Required Report - public distribution
Date: 02/13/2019
GAIN Report Number: 1901
Brazil
Poultry and Products Semi-annual
2019 Poultry and Poultry Products Semi-Annual Report
Approved By:
Oliver Flake, Agricultural Counselor
Prepared By:
João F. Silva, Agricultural Specialist
Report Highlights:
Chicken meat production is forecast to grow 1.8 percent in 2019 to nearly 13.6 million metric tons.
Domestic demand should drive growth due to a projected 2.5 percent increase in gross domestic product
and a lower inflation rate. Exports are to increase, but at a slower pace due to constraints in major
import markets, such as Saudi Arabia and the European Union. Feed costs are likely to remain stable,
despite a small reduction in the corn and soybean crops. The exchange rate is expected to be less
volatile in 2019.
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Executive Summary:
Post revised downward the forecast for chicken meat production, and now forecasts growth of 1.8
percent in 2019 to nearly 13.6 million metric tons (MT), mostly driven by a rebound in domestic
consumption and to a lesser extent exports. The revised forecast is supported by higher consumer
income derived from economic growth estimated at 2.5 percent and an expectation for inflation to
remain under control. In addition, the outlook for production factors is for stable feed costs and
improved producer’s margin costs. Exports are also forecast to rebound from last year’s poor
performance, but at a lower rate of growth than previously forecasted.
Commodities:
Poultry, Meat, Broiler
Production:
Chicken meat production in 2019 is revised down from the previous forecast of 13.9 to 13.6 million
metric tons. Post believes that a lower production estimate reflects the current expectation of producers
to continue with a strategy to adjust supply and demand for chicken meat, and maintain their profit
margins. The lower forecast also reflects concerns of exporters with restrictions in traditional import
markets, mostly from Saudi Arabia and the European Union. However, economic growth, estimated at
2.5 percent in 2019, and an inflation rate under control are likely to improve consumer income and
cause a rebound in domestic demand of chicken meat in 2019. Post also expects lower competition from
beef and pork. In addition, feed costs are expected to increase less in 2019 than last year, which saw the
second highest cost of production on record.
Downward adjustments for the 2018 estimates were made for production, exports and domestic
consumption of chicken meat to reflect new trade data. Producers and exporters faced, in 2018, a
myriad of problems, such as an unexpected national truck drivers’ strike which hit hard the poultry and
swine sectors in Brazil with losses estimated at US$ 1 billion. In addition, international restrictions on
Brazilian chicken exports to China (anti-dumping measures), European Union (ban on imports from
major chicken packers in Brazil due to fraud in laboratory tests), and Saudi Arabia (stunning
requirements), caused a major drop in chicken exports for the first time in decades.
Production Costs:
In Brazil, corn and soybean meal represent about 70 percent of the cost of chicken meat. Initial
projections for the 2018/19 crop season called for a bumper crop of grains and oilseeds due to the large
use of biotechnology and subsidized credit. However, a major dry spell during the growing season of
these crops has reduced the estimated volume of grains and oilseeds currently being harvesting.
Although such losses are, still being surveyed, possible increases in the price of feed in 2019 is already
a factor of concern to chicken producers.
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During 2018, the cost of production of chicken meat increased by nearly 15 percent, the second largest
increase on record. The table below is the cost of production for the state of Parana, which is the largest
producer in Brazil. The increase in the cost of production was due mostly to an increase of nearly 12
percent in nutrition expenses, followed by the increase in the cost of day old chicks.
Mont Live Chicken (R$/kg) Corn (R$/60 Soybean Meal Cost of
h Kg bag) (R$/kg) Production
(R$/Kg)
201
2017 2018 7 2018 2017 2018 2017 2018
37. 34.5
Jan 2.65 2.57 36 9 1.02 1.04 2.47 2.61
37. 36.8
Feb 2.63 2.48 47 6 1.00 1.15 2.53 2.58
35. 44.7
Mar 2.69 2.36 83 4 0.97 1.27 2.42 2.70
30. 42.4
Apr 2.50 2.20 29 3 0.93 1.30 2.35 2.84
29. 45.2
May 2.50 2.37 66 9 0.98 1.44 2.31 2.92
28. 44.1
Jun 2.50 3.07 14 9 0.99 1.43 2.30 2.91
27. 39.6
Jul 2.50 3.00 53 4 0.99 1.41 2.29 2.84
27. 44.1
Aug 2.50 3.00 32 1 0.97 1.39 2.25 2.87
29. 43.0
Sep 2.50 3.19 85 5 0.96 1.39 2.30 2.95
32. 38.5
Oct 2.63 3.19 54 2 0.99 1.37 2.37 2.90
33. 38.4
Nov 2.70 3.02 08 8 1.00 1.28 2.38 2.82
33. 39.9
Dec 2.70 2.94 40 8 1.04 1.26 2.46 2.82
Notes
:
(A) All prices for the interior of São Paulo
(B) Cost of Production is per kilogram of live-weight, aviary type air-conditioned under positive pressure, state of
Parana.
(C) The average exchange rate in 2018 was US$1.00 = R$3.65, compared to R$3.19 in 2017.
Source: Avisite and Embrapa
Consumption:
Domestic consumption of chicken meat in 2019 is forecast to rebound by two percent, after a small
decline last year. The Post revised forecast reflects estimated economic growth of 2.5 percent in 2019,
inflation below the government target rate of 4 percent and improved consumer income. The number of
Brazilian families in debt declined by 3 percent at the end of 2018. In addition, chicken prices are
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estimated to be more competitive in 2019 due to higher supply of chicken meat available in the domestic
market and Brazilian consumer preference for chicken meat.
Trade:
Post revised down the forecast for chicken meat exports lower in 2019 but shipments are still expected
to expand moderately at around 1.3 percent. The small increase in chicken meat exports is primarily due
to projected higher shipments to new markets, such as South Korea, Chile and Mexico, and higher
demand from China (see below). However, continued import constraints faced by Brazilian exporters in
two major import markets, Saudi Arabia and the European Union (see below), remain a major
impediment to expanded exports. In addition, a new concern for Brazilian traders is the intention of the
Brazilian federal administration to move the Brazilian embassy in Israel from Tel Aviv to Jerusalem,
which could affect Middle-East importers of Brazilian animal protein (see below). The expected lower
volatility of the exchange rate foreseen in 2019 also contributes to making the Brazilian product more
competitive in the world market.
In 2018, Brazil exported chicken meat to 163 countries, 15 percent above the previous year. Exports are
concentrated in 10 major markets, which account for nearly 70 percent of all exports. The total volume
exported in 2018, including those categories not covered by USDA data, declined by 5.2 percent to
slightly over 4 million metric tons. Whole chicken meat accounted for 68 percent of all exports,
followed by chicken parts, with 28 percent. High processed chicken meat, at 2.5 percent, and salted
chicken meat, at 2.4 percent, accounted for the remaining chicken meat exports. Most of the decline for
chicken meat exports in 2018, compared to the previous year, was in salted chicken meat (34 percent
less), followed by high processed chicken meat (31 percent less) and whole chicken meat (11 percent
less). Total receipts of Brazilian meat exports in 2018 reached nearly US$6.5 billion, a drop of 4.2
percent over the previous year.
Chicken Exports 2017 2018
Total 4,234.1 4,013.1
- Whole Chicken 1,246.1 1,108.9
- Chicken Parts 2,700.6 2,709.2
- Processed Chicken Meat 144.9 99.0
- Salted Chicken Parts 142.6 95.0
Source: Brazilian Foreign Trade Office
The following is a brief 2019 outlook for major importers of Brazilian chicken meat:
China/Hong Kong: Trade sources project exports to continue to expand in 2019. This optimism reflects
a higher number of plants approved to export to China and the recent agreement to end the anti-dumping
dispute with China, which was resolved in Mid-January 2019 and will enter into force as of February
19, 2019. Post contacts report that China’s Ministry of Commerce accepted an offer made by the
Brazilian exporters association to establish a minimum export price on all chicken meat exports to
China. Local traders are optimistic about a recovery in Hong Kong imports, mostly chicken wings.
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Saudi Arabia: In 2018, Brazilian chicken exporters faced import restrictions due to the poultry stunning
issue. This resulted in a drop of 17 percent in chicken meat exports to Saudi Arabia last year. In mid-
January 2019, Saudi Arabia trimmed the list of eligible Brazilian chicken meat exporters leaving only
25 packers, out of the original 55 plants previously approved. The ban included some major and
traditional packers with a long history of exporting to Saudi Arabia.
Saudi Arabia has alleged “technical” reasons for downsizing the list. Both Brazilian officials and
exporters believe that the real reason behind Saudi Arabia’s decision is a strategic plan of the Saudi
Arabian government to reduce its dependence on imported chicken meat, with measures to protect local
industry. Some private analysts estimate losses at 65,000 to 75,000 metric tons of chicken meat exports
in 2019 to Saudi Arabia.
Middle Eastern Markets: There are rumors in Brazil that link the downsizing of Brazilian plants by
Saudi Arabia to the Brazilian government’s intention to move its embassy in Israel from Tel Aviv to
Jerusalem, which could also affect other Middle-Eastern importers of Brazilian animal protein.
Currently, this is the major concern of Brazilian chicken exporters who are lobbying the Brazilian
government to end this Embassy change, which was part of the presidential campaign in 2018 by the
current administration. The Union of the Arab Chambers of Commerce has come out against this idea,
which could be a major hurdle for chicken exporters to Middle-Eastern markets.
European Union: The E.U. continues to restrict imports of Brazilian chicken meat from Brazil due to
health problems derived from the meat inspection scandal, which involved laboratory fraud with risks of
salmonella in chicken exports. The European Union maintains the suspension of 20 Brazilian plants to
export chicken meat to the bloc. The suspension affects most of the traditional and large Brazilian
packers.
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Production, Supply and Demand Data Statistics:
Meat, Chicken 2017 2018 2019
Market Begin Year Jan 2017 Jan 2018 Jan 2019
Brazil USDA Official Old Post New Post USDA Official Old Post New Post USDA Official Old Post New Post
(Units)
Beginning Stocks 0 0 0 0 0 0 0 0 0 (1000 MT)
Production 13612 13612 13612 13550 13550 13355 13800 13860 13595 (1000 MT)
Total Imports 3 3 3 1 1 3 1 1 3 (1000 MT)
Total Supply 13615 13615 13615 13551 13551 13358 13801 13861 13598 (1000 MT)
Total Exports 3847 3847 3847 3685 3685 3687 3775 3795 3735 (1000 MT)
Human Consumption 9768 9768 9768 9866 9866 9671 10026 10066 9863 (1000 MT)
Other Use, Losses 0 0 0 0 0 0 0 0 0 (1000 MT)
Total Dom. Consumption 9768 9768 9768 9866 9866 9671 10026 10066 9863 (1000 MT)
Total Use 13615 13615 13615 13551 13551 13358 13801 13861 13598 (1000 MT)
Ending Stocks 0 0 0 0 0 0 0 0 0 (1000 MT)
Total Distribution 13615 13615 13615 13551 13551 13358 13801 13861 13598 (1000 MT)
Balance 0 0 0 0 0 0 0 0 0 (1000 MT)
Inventory Balance 0 0 0 0 0 0 0 0 0 (1000 MT)
Production Change 1 0 0 0 0 -2 2 2 2 (PERCENT)
Import Change 0 0 0 -67 -67 0 0 0 0 (PERCENT)
Export Change -1 0 0 -4 -4 -4 2 3 1 (PERCENT)
Consumption Change 1 0 0 1 1 -1 2 2 2 (PERCENT)
Imports Percent Consumption 0 0 0 0 0 0 0 0 0 (PERCENT)
Exports Percent Production 28 28 28 27 27 28 27 27 27 (PERCENT)
Population 207353391 0 0 208846892 0 0 210301591 0 0 (PEOPLE)
Per Capita Consumption 47.1 0 0 47.2 0 0 47.7 0 0 (KG)
Annual % Change Per Cap. Cons. 0.6 0 0 0.2 0 0 1.1 0 0 (PERCENT)
TS=TD 0 0 0 0 0 0 0 0 0
Post Notes
Notes: Not Official USDA Data; Excludes chicken feet and paws exports to China and Hong Kong.
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Export Trade Matrix
Country Brazil
Commodity Poultry, Meat, Chicken
Time Period Jan - Dec Units: Metric Tons
Exports for: 2017 2018
U.S. 0 U.S. 0
Others Others
Angola 68,444 64,747
Chile 44,156 50,083
China 391,037 438,866
Cuba 61,726 73,453
Egypt 162,775 58,457
European Union 185,017 175,330
Hong Kong 250,145 212,510
Ghana 12,257 16,162
Iraq 120,797 104,107
Japan 445,373 398,376
Jordan 42,963 48,915
Kuwait 116,209 123,265
Mexico 94,584 111,318
Oman 79,498 74,643
Peru 16,751 21,612
Phillippines 35,531 52,455
Qatar 77,693 63,378
Russia 83,027 64,506
Saudi Arabia 589,575 486,859
Singapore 81,981 96,777
South Africa 344,525 332,068
South Korea 88,947 113,244
UAE 300,114 309,817
Yemen 67,984 85,530
Venezuela 20,708 114
Total for Others 3,781,817 3,576,592
Others not Listed 307,224 346,121
Grand Total 4,089,041 3,922,713
Note: Includes HTS Codes: 0207.11; 0207.12; 0207.13; 0207.14;
and 1602.32
Quantity in Product Weight Equivalent (PWE)
Updated: January 28, 2019
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