Analysis Meat & Proteins
Slaughter chicken market dropped below zero
Negative electricity prices have become a well-known phenomenon in the Netherlands, but negative prices for slaughter chickens also exist. The market is so bad that the quotations have recently dropped below zero. This is something that rarely occurs, but is likely to continue for a while. The sales opportunities are very difficult, as heard from the market.
The price of white slaughter chickens in the Netherlands has been at -€0.04 per kilogram since early July. In 2018, the quotation was also briefly negative, but that lasted only a week. Now the quotation has been below zero for six weeks. The quotation for brown slaughter chickens is slightly higher, standing at a meager cent per kilogram.
A Dutch slaughter chicken trader who prefers not to be named speaks of a significant imbalance in the market. The supply of slaughter chickens in the Netherlands (and elsewhere in Europe) is currently high. One of the reasons for this is the bird flu virus, which is much less active this year than in previous years. As a result, there are fewer culls and more chickens go to the slaughterhouse after they have finished laying.
Fierce competition
Slaughter chickens are only slaughtered to a limited extent in the Netherlands. The majority of the supply from our country goes to two large slaughterhouses in Belgium. There are also customers in Germany and Poland. The demand for slaughter chickens is very low, according to the trader. This is partly due to scaled-back holiday schedules, but further down the chain, things are also stagnating. Slaughterhouses have great difficulty in selling the meat and have full frozen stocks.
The meat of slaughter chickens is mainly intended for African countries, but there is fierce competition from slaughterhouses in Asian countries, Turkey, and the United States. "The rapidly rising cost price obviously does not help the European poultry industry to compete against these countries," he indicates.
Surcharge compensates
The negative revenue price suggests that poultry farmers have to pay when they deliver slaughter chickens. However, it is not that bad. This is due to the surcharge on top of the base price, which in many cases ranges from 5 cents to 10 cents per kilogram. In fact, poultry farmers often still receive a few cents per kilogram at the moment. This does not change the fact that the revenues are far below what was received just a few months ago. Earlier this year, the price was almost €0.25 per kilogram. When an average farm delivers 100,000 slaughter chickens after the laying period, the revenues are €20,000 lower at the moment, as calculated by the trader. Although slaughter prices may not be the main source of income for these laying farms, the revenues are sorely missed.
The trader expects that the quotation cannot drop much lower than this. Otherwise, we would reach a point where poultry farmers would actually have to pay to deliver slaughter chickens, and that is not likely to happen. However, he does expect that the negative prices will remain on the boards for the time being.
