The Brazilian poultry industry is expected to see further consolidation this year along with greater investment in further processing, forecasts Rabobank.
While the industry is expected to benefit from continued lowering of grain prices, growth in production will be constrained by the home market being close to saturation point for unprocessed poultry meat and by export markets being vulnerable to oversupply.
In addition, Rabobank reports, the squeeze on consumer spending power resulting from lower income growth and permanently high inflation means that the domestic market, which accounts for 70 percent of sales, is unlikely to absorb any surpluses, should export volumes be lower than expected, without seeing local prices decline. Overall, the Brazilian economy is expected to grow by a slower rate this year than it did in 2013.
The Brazilian poultry industry had to absorb higher labor and transport costs in 2013, and although consolidation of the sector and efforts to increase productivity will address rising costs, they are unlikely to eliminate them, suggesting that part of the benefit of reduced feed costs will be offset by higher processing costs.
While the industry is expected to benefit from continued lowering of grain prices, growth in production will be constrained by the home market being close to saturation point for unprocessed poultry meat and by export markets being vulnerable to oversupply.
In addition, Rabobank reports, the squeeze on consumer spending power resulting from lower income growth and permanently high inflation means that the domestic market, which accounts for 70 percent of sales, is unlikely to absorb any surpluses, should export volumes be lower than expected, without seeing local prices decline. Overall, the Brazilian economy is expected to grow by a slower rate this year than it did in 2013.
The Brazilian poultry industry had to absorb higher labor and transport costs in 2013, and although consolidation of the sector and efforts to increase productivity will address rising costs, they are unlikely to eliminate them, suggesting that part of the benefit of reduced feed costs will be offset by higher processing costs.
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