Brazil's export restrictions on some poultry products with effect from July 18 following a viral outbreak is expected put downward pressure on local chicken prices in the near term amid an expected increase in domestic supply, market participants said July 19.
Brazil's Ministry of Agriculture and Livestock announced July 18 that an outbreak of Newcastle disease in commercial poultry had been detected in the municipality of Anta Gorda, in the state of Rio Grande do Sul.
As a precautionary measure, the ministry enforced export restrictions on chicken, eggs, and other poultry products as of July 18. Some of the restrictions impact national production, while others are focused more locally within the state or a certain radius of the outbreak.
As part of the restrictions, Brazil banned exports to Argentina, the EU, and China -- Brazil's largest trading partner for chicken exports and accounting for 15% of Brazilian exports in the first half of 2024.
Platts, part of S&P Global Commodity Insights, assessed Brazil chicken price at $2,050/mt CFR for delivery to Japan, on July 18, unchanged over the past 15 days.
On a local-level, poultry facilities in Rio Grande do Sul, where the outbreak happened, will not be able to export to South Africa, Albania, Saudi Arabia, Bolivia, Kazakhstan, Chile, China, Cuba, Egypt, Philippines, Georgia, Hong Kong, India, Jordan, Kosovo, Macedonia, Mexico, Myanmar, Montenegro, Paraguay, Peru, French Polynesia, the UK, Dominican Republic, Sri Lanka, Thailand, Taiwan, Ukraine, Eurasian Economic Union, Uruguay, Vanuatu, and Vietnam.
There are also export restrictions on facilities located within a 50-km radius of the affected area. Countries such as Japan, South Korea, and Canada, among others, will be impacted under these restrictions.
But market participants said that these restrictions do not pose a significant risk to supply to the destinations, as other states in Brazil would be able to cover the gap. The main impact would be on revenue and stocks in Rio Grande do Sul. Sources were concerned that the limits on exports could impact the domestic market, as the halted exports will lead to an increase in local supply and likely impact domestic prices negatively.
All necessary isolation measures were taken in the area where the Newcastle disease case was confirmed, and there were no signs of the outbreak spreading beyond the commercial farm in Anta Gorda, Rio Grande do Sul, Agriculture Minister Carlos Favaro told local media.
In the worst-case scenario, the export restrictions could impact 15% of total Brazilian chicken exports, Ricardo Santin, president of the Brazilian Animal Protein Association said July 19 during an interview with local media.
According to data from the National Geographic and Statistics Institute of Brazil, or IBGE, Rio Grande do Sul is the third largest poultry producer and exporter in Brazil, behind Parana and Santa Catarina states, and accounts for 10% of national production. While data from the Secretariat of Exports and Commerce showed that the state represents around 14% of total Brazilian exports.
