UAE chicken prices fall as counterfeit labels shake trust, build surplus

In the UAE the price of chicken has fallen sharply after importers discovered counterfeit labels on chicken products mimicking well-known Brazilian brands.

Images of the falsely labelled products were widely shared among traders, prompting concerns about food safety certification and market instability and depressing the market with surplus meat at a time of weak demand.

"The market dropped locally due to illegal imports of duplicate products of Brazilian famous brands like Aurora, Copacol and Lar," said one market participant, referring to the three largest suppliers.

At the time of publication, none of the three brands had replied to a request for comment.

In summer, the UAE market generally sees a reduction in meat price due to a seasonal fall in demand from both tourists and residents avoiding the extreme heat. This summer, the price of domestic chicken breast sold ex-warehouse in the UAE fell 21% for legitimate Brazil products.

During the period in which the counterfeit products were found in the market, legitimate Brazilian chicken breast prices on the domestic market dropped to a low of Dirhams 11/kg (US$3/kg), from a pre-summer high of Dirhams 13.50-14/kg. In this environment, many traders said that they were selling their stock below cost.

On July 1, Platts assessed the price of a 27 mt container of chicken breast at between $3,250/mt on a CIF Jebel Ali basis for shipment from origin from 30 to 60 days from the date of publication. Platts is part of S&P Global Commodity Insights.

Traders talk of circumvented ban

"Now that Chinese poultry imports are banned, it's unclear if traders are still using transshipment ports to bring in Chinese products with Brazilian labels," said one local UAE trader, referring to a long-standing block on imports from the world's most populous country.

"They [the exporters of falsely labelled chicken] can't produce authentic Brazilian documents to clear customs and health authorities," the trader added.

The counterfeit products are being sold for as low as Dirhams 9/kg, contributing to further market instability. Market participants have reported serious concerns with chicken meat, such as issues of poor texture, unpleasant smell, and incorrect weights. Many consumers are choosing to avoid these cheaper alternatives despite the potential cost savings.

Prices for Brazilian chicken breast have been fluctuating due to global supply chain disruptions and an increase in global demand. Middle East chicken breast has experienced a decrease of 8% in prices since the all-time high at the start of July.

This is attributed to the rebound in supply following the flooding in Rio Grande do Sul, reduced global demand following the summer grilling season in the Northern Hemisphere and a further reduction in regional demand due to extreme summer temperatures in the Middle East.

As the summer season draws to a close, market participants anticipate a potential rebound in prices. However, the long-term impact of the counterfeit issue remains uncertain. Authorities and market participants are calling for stricter enforcement and enhanced consumer awareness to restore confidence and stability in the market.

Platts assessed Middle East chicken breast boneless skinless at CIF Jebel Ali basis at $3,050/mt on July 19.