Brazil, the largest global chicken exporter, recently expanded its export ban due to avian influenza, affecting chicken, egg, and poultry product exports to China. This has led to significant price hikes in China’s chicken market. In the first half of 2023, China imported 276,100 tons of chicken products from Brazil, a 29% decrease from last year, yet Brazil still accounted for 27% of China’s chicken imports. The ban has caused frozen chicken product prices in China to surge by CNY 1,000 to 3,000 per ton. Brazil expects to resume exports within 15 to 30 days, but the ban’s impact on China’s market remains substantial, with potential further price increases in the short term.
The recent decision by Brazil, the world’s largest chicken exporter, to expand its chicken export ban due to avian influenza has raised significant concerns about its impact on China’s meat prices and consumer market. On July 19th, Brazil announced a halt to all chicken, egg, and poultry product exports to China. Given that Brazil is a major supplier of poultry to China, this move is expected to have considerable repercussions on the Chinese market.
In the first half of 2023, China imported 276,100 tons of chicken products from Brazil, a 29% decrease compared to the same period last year. Notably, 27% of Brazil’s chicken exports are destined for China, with China’s total chicken imports for 2023 exceeding 1.3 million tons. Despite the overall decline, the dependency on Brazilian poultry remains substantial.
Immediate Market Reactions
Since the ban, the prices of frozen chicken by-products in China have surged significantly. Domestic prices for segmented frozen chicken products rose by CNY 1,000 to 3,000 per ton, while prices for imported frozen products experienced even more dramatic increases. For instance, chicken wing prices spiked by over 16% within a week, followed by similar increases in chicken mid-wings and chicken feet.
Impact on Brazil
For Brazil, the temporary export ban is expected to impact 5% to 7% of its national production. Brazilian Minister of Agriculture and Livestock Carlos Fávaro has indicated that President Lula has mandated transparent handling of the situation to mitigate domestic and international concerns about Brazil’s agricultural defense system’s safety. The Brazilian government is optimistic about resuming normal exports within 15 to 30 days, pending eradication information submission and importers’ approval, as the self-imposed ban does not require World Organisation for Animal Health (WOAH) approval.
Influence on China’s Market
The reduction in imports and increasing market demand in China may lead to further short-term price hikes for chicken products. Domestic companies like XianTan Group and Sunner Group are likely to benefit from reduced competition, potentially boosting their market performance. However, industry experts caution that while prices for specific products like wings and feet may continue to rise due to seasonal demand, the overall price increase may be limited by the short supply cycle and relatively stagnant end-market demand.
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