The global poultry market is facing challenges in the second half of 2018 brought on by trade volatility associated with Brazil, according to the Rabobank Quarterly Q4 2018 report.
Those trade issues include European Union trade restrictions placed on several Brazilian plants, changing halal standards in Saudi Arabia, the lingering impact of an earlier trucker strike in Brazil and the recent safeguard on Brazilian chicken imports set by China, the report stated.
Nan-Dirk Mulder, Rabobank senior analyst for animal protein was the lead author of the report.
20 percent drop in Brazilian poultry exports
During the second quarter of 2018, Brazilian poultry exports dropped 20 percent, which was a historic drop.
Challenges that led to that drop in Brazilian exports appear likely to continue into the second half, Rabobank forecast, as the trade restrictions continue and a local oversupply of poultry in Brazil continues. Brazil did see some improvements in its ability to export in July, but August trade figures indicated that the improvements seen in July were only temporary.
The Brazilian poultry industry is also faced with rising domestic feed prices.
Brazil’s impact on global prices
Since Brazil is the world’s top exporter of chicken, its trade volatility has created changes in export supply and prices, Rabobank stated.
During the second quarter, global poultry prices dropped. Global prices for whole chicken prices dropped by 5 percent, according to Rabobank, while global chicken leg prices dropped 10 percent.
Other countries benefit from Brazilian trade problems
While Brazil’s trade troubles have had some negative impacts on the global poultry industry, the export troubles that are being experienced by Brazil have helped other countries with their ability to export poultry, Rabobank stated in the report.
The Ukraine is increasing its export position with total poultry export volumes reached a record 155,000 metric tons during the first half of the fiscal year.
Other Latin American countries have also benefitted from Brazil’s challenges, according to Rabobank. Poultry exports from Chile have grown, and although to a lesser degree, exports from Argentina have also grown.
