Brazilian chicken meat prices have reversed sharply in week 14, ending a bearish trend that had held for several months. Whole bird and cut prices rose between 5% and 7% week-on-week, with the further escalation of the Middle East conflict identified as the primary driver.

Fuel costs hit producer margins

Rising fuel prices have pushed up barge vessel rates, increasing transportation costs and forcing Brazilian producers to raise prices. In the longer term, higher fertilizer and feed costs, also linked to the conflict, are expected to add further upward pressure on production costs.

Slaughter volumes expected to fall

Cepea estimates broiler slaughter numbers in Brazil are likely to decrease over the coming quarter, tightening domestic supply. Daily average export volumes also declined in March compared to February. The end of the Lent period is expected to lift domestic demand, reinforcing the more bullish outlook for Brazilian origin chicken.

Brazil’s discount to Thai chicken narrows

The price increases have reduced Brazil’s price discount relative to Thai chicken. Thai prices have remained largely stable so far, though Thailand typically reacts more slowly to global price shifts given its reliance on OEM-based contracts. Further price increases in Thailand remain possible.

An additional risk for European buyers

Europe’s chicken market has been broadly bearish in recent weeks. Slaughter numbers in March came in below year-ago levels, delaying the typical seasonal price recovery. High volumes of competitively priced imports from Brazil and Ukraine have added to the supply pressure.

The Middle East conflict introduces a further downside risk. If exporters such as Brazil and Ukraine redirect volumes away from the region toward Europe, the current supply overhang could persist longer than seasonal patterns would suggest. The picture is not straightforward: Brazil’s exports to the Middle East are predominantly light broiler breeds for whole bird consumption, while heavier cuts are typically shipped to Europe. The regions are not perfectly substitutable, but a partial shift in trade flows could still weigh on European prices.

Rising energy and feed costs will push up production costs for both European and foreign producers over the longer term, which may eventually act as a floor under prices.

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