Brazil chicken, pork production costs dim output forecasts
Despite recent trend of lower costs, higher costs earlier in the year have led to expected reduced annual output
For a second successive month, average production costs for Brazil’s broiler and pig farmers dropped in August. The reductions amounted to just 2.65 percent and 0.46 percent for poultry and swine, respectively, according to figures published by CIAS, the Central Intelligence Poultry and Swine with the Brazilian Agricultural Research Corporation (Embrapa).
Having experienced rapidly rising costs earlier this year, producers will welcome the continuation of the downward trend, however small. Nevertheless, the Brazilian producers’ association has revised its forecasts for the country’s poultry meat and pork output for 2016.
For broilers, the CIAS index (ICPFrango) decreased from 225.2 in July to 219.3 in August. This still represents an increase of just over 9.8 percent so far in 2016, and of 22.7 percent over the last 12 months.
The score for pig production costs (ICPSuíno) stood at 246.7 in August – down from 247.9 the previous month. The index has risen by almost 19.9 percent so far in 2016 and stands just over 28.7 percent higher than at the same point in 2015.
Reductions in the cost indices for both species arise mainly from low feed prices as locally produced corn (maize) and soybeans have become cheaper. For pigs, the reduction in feed cost from the previous month is only marginal at 0.07 percent, but the 2.8 percent fall for broiler feed will have a noticeable effect for poultry producers. Despite the recent downward trends, feed costs for both species remain well over 20 percent above the levels of 12 months previously.
To put the current situation into perspective, in September 2015, ICPFrango stood at just under 192.0, and ICPSuíno at 195.0.
The indices of production costs were created in 2011 by socioeconomics team of Embrapa Swine and Poultry and the National Food Supply Agency (Conab). The ICPFrango score represents typical broiler production costs for a ventilated poultry shed in the state of Paraná, while ICPSuíno is based on a typical “full cycle” pig production system in the state of Santa Catarina.
Brazilian chicken, pork output estimates cut
Reduced pressure on the domestic corn supply comes not only from the new harvest but also planned reductions in output by Brazilian poultry and pig companies, according to the chief executive of the Brazilian Animal Protein Association (ABPA), Francisco Turra.
Monitoring production company plans, Turra now forecasts chicken meat output at 13 million metric tons this year (4 percent below the previous estimate), and pork production at 3.64 million metric tons (down 3.2 percent). The new figures are based on strategies to slow the pace of growth in the sectors by cutting work shifts, closing plants and putting the brakes on live production.
These changes will cut corn requirements by 1 million metric tons, Turra estimates.
“The positive outlook on the corn supply is also influenced by grain supplies in Paraguay and Argentina, plus the good performance of the first harvest, especially in the southern states, which account for 70 percent of poultry production and 80 percent of pork production,” he said. “For both sectors, however, it is essential that U.S. maize can be imported into Brazil. With this, the shortages we faced in the first half will not be repeated.”