Porto Alegre, June 17, 2021 – The housing of breeding chicks remains at a high level in 2021. This kind of strategy goes against the market logic in a year in which corn prices have quickly exceeded all expectations. As is known, animal nutrition has the greatest weight in the cost structure of a farm, and corn is the main raw material in the production of feedstuff. Corn supply must be back to normal only with the start of the corn’s second crop in August. There are few alternatives at the moment, the best of which would be to reduce demand by cutting the housing of chicken.
If housing were cut, the market would be improved in two distinct ways. The first is that, with smaller housing, there would be a decline in corn consumption, which would help mitigate the process of price detachment of this raw material. Another aspect is that, with a more balanced supply, there would be room for sharper bullish movements in the chicken industry.
According to data from APINCO, in the first four months of the year, Brazil housed nearly 2.28 billion head, up 4.3% from the same period last year. In the last month of April alone, around 569.22 million head were housed, an increase of approximately 5.6% compared to April 2020. SAFRAS & Mercado estimates that the housing of breeding chicks will surpass the historic mark of 7 billion head in 2021, up 2.7% from 2020, when around 6.8 billion head were housed.