Analysis Poultry & Chicken
Broiler price rises significantly due to tightness
The broiler price in the Netherlands has taken significant steps upwards in the last two weeks. According to insiders in the market, the demand is good, but the supply has decreased considerably. Although the prices have risen due to a combination of circumstances, a stronger import seems necessary to push the prices down. However, this seems unlikely, as the Dutch price is still relatively low.
The broiler price has taken significant steps upwards in recent years. In week 36, the price stood at €1.15 for the twelfth consecutive week. However, in weeks 37 and 38, the market started moving with two steps up by 2 cents each. This brings the broiler price to €1.19 this week.
According to insiders in the market, the increase in the poultry meat market does not come as a direct surprise. The Dutch demand for poultry meat remains very strong, as heard in the market. The poultry meat market benefits from the end of the holidays. With consumers returning to the Netherlands, the demand for chicken meat is increasing again. Additionally, the poultry meat market is hardly affected by the end of the barbecue season.
However, insiders in the market did not expect the prices to increase so significantly. Traders mention that the substantial increase is a result of market tightness. The cause of this tightness is not structural. Traders mention that poultry farmers may sometimes deliver less for a week. Usually, this is spread out over several weeks, limiting the impact. However, in the last two weeks, the number of poultry farmers failing to deliver coincided. According to some traders, the number of broiler farms unable or unwilling to sell chickens was about seven times higher than expected. Insiders in the market also indicate that this is not the experience of just a few players, but that colleagues are experiencing the same situation.
This does not necessarily mean that prices will quickly correct when the supply normalizes. Compared to the supply, poultry meat prices have been on the low side in recent months. Recovery in this case means a return to a situation of slight tightness. This makes lowering prices a risky strategy, as low prices can lead to slaughter lines being too empty to operate profitably.
World market tight
In other words, for lower prices, imports will need to resume, as heard in the market. For now, there are no signs that imports will become attractive again in the short term. The prices in the main import market for the Netherlands, the Polish market, are still considerably higher than the Dutch prices. Depending on the region, broiler prices are currently at least 5.30 zloty (at current exchange rates €1.24) per kilo. In regions where slaughter prices are highest, 5.45 zloty (€1.28) per kilo is paid out.
Prices on the world market also remain significantly higher than the Dutch prices. In the leading Brazilian market, prices are quite volatile. On August 22, the Brazilian broiler price decreased to 7.20 real (€1.18) per kilo. However, on Wednesday, September 18, the price was back to 7.50 real (€1.23). This keeps the Brazilian broiler price at about the same level. The price has been within this range since September. The high Brazilian prices indicate that the North European prices are still competitive in the world market.
