Porto Alegre, March 12, 2021 – Chicken farming has the perception that domestic demand will focus on chicken in 2021. In this context, the focus will be on expanding production. This kind of strategy has some coherence, but there are great concerns in the industry, mainly over the costs of the activity. Starting with the costs of animal nutrition, the difficulty with corn supply in 2021 will be constant until the beginning of the corn’s second crop. The delay in the soybean harvest results in a consequent delay in the planting of the corn’s second crop, that is, there will only be a sufficient corn supply in late July and early August.
And it is not only feeding that is more expensive. Other costs also put pressure on the activity, including the cost of electricity. No matter all the consistent price hikes in recent weeks, the operating margin is negative in many states. The increase in supply makes it impossible for chicken to show a better performance in the domestic market.
Housing in the last quarter was very strong, with the volume of 600 million head surpassed on two occasions. At the beginning of 2021, there was no such consistent change in terms of volume. According to data from APINCO, around 590 million head were housed in the last month of January, an approximate growth of 2.9% over the same period last year.
The trend is that chicken farming will continue seeking expansion of production over the year, however, this movement may not be compatible with the cost structure. There are no viable alternatives for corn consumption at this time. The exchange rate that makes our meat so competitive internationally also makes importing inputs more expensive. The price behavior of breeder chicks and fertile eggs in the Brazilian market reinforces the need for maintaining housing strategies at such a high level.
As a positive point, it must be mentioned that chicken still has the predilection of the average consumer, a dynamic that should not change over the course of this year, as previously discussed. Moreover, there is a positive scenario around the expansion of Halal exports added to the advance of other traditional importers such as Japan. Anyway, profitability will be a problem in many Brazilian chicken farms in the first half of this year.