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Brazil chicken processors seen cutting output as demand weakens

Brazilian chicken production fell in the first quarter, according to a meat lobby group, while industry sources told Reuters on Monday some poultry producers were already making moves to further cut future output in the coronavirus pandemic.

21 April 2020, at 12:54pm

Preliminary data indicates "a slight reduction" in Brazilian chicken output in the first three months of the year as the outbreak dragged down the domestic market, meat association ABPA said.

An industry source told Reuters that some chicken farmers in Brazil are curtailing their production by housing fewer birds during the health crisis, in a "speculative" move.

Also, chicken farmers have been killing the mother hens at 55-58 weeks, earlier than usual, so they produce fewer chicks, the person said requesting anonymity to speak freely. That could affect meat production levels in 7 to 10 weeks' time, according to the source.

A mother chicken normally lives about 66 weeks, according to ABPA.

The chief executive of BRF SA, Brazil's largest chicken processor which relies on integrated farmers for supplies, saidchicken housing decisions are dictated by a company's available processing capacity.

He said if too many people in a given region of the country are contaminated by the novel coronavirus, the plant's production capacity in that region may be compromised, as is happening with certain meat processors in the United States.

"It is not impossible that given everything that is happening one needs to reduce production volumes to safeguard the life and the safety of people," Luz said by telephone.

Production adjustment calls have to made based on data collected on a daily basis, and there is too much uncertainty, he said.

Luz declined to comment on the size of any potential output cuts.

Export markets remain strong, according to preliminary data from the economy ministry, according to ABPA, which represents pork and poultry processors.

In 60 days there could be a 3 to 5 percent reduction in Brazil's poultry output, the industry source said, noting this would be temporary because the production base will stay the same. ABPA did not comment on a potential drop in output.

Frozen chicken prices showed a 13.8 percent monthly drop as of last Friday in São Paulo state, Brazil's most affluent, according to Cepea, an applied economics centre at São Paulo University.