LS SECURITIES forecasted on the 20th that while the import ban on Brazilian chicken may cause some gaps in domestic supply, the direct damage to large chicken franchise businesses that have been using domestic chicken will be minimal.
After highly pathogenic avian influenza (HPAI) occurred in commercial poultry farms in Brazil, the government completely banned the import of Brazilian chicken from the 15th of the month. The Brazilian government also independently limited the export of its chicken for 60 days.
Due to this announcement, the stock prices of domestic chicken-related companies surged the day before. MANIKER hit the upper limit (the upper limit of the daily price range), and Harim's stock also jumped more than 25%. This is because Brazilian chicken accounts for a large portion of domestic imports. Last year, out of a total chicken import volume of about 220,000 tons, 180,000 tons were from Brazil, accounting for 81.8%.
Park Seong-ho, a researcher at LS SECURITIES, said, “Considering that domestic chicken consumption last year was about 740,000 tons, an increase in domestic broiler prices due to supply shortages is unavoidable,” and added, “Even if the export volume of domestic chicken, approximately 60,000 tons, is all converted for domestic supply, there will still be some gaps in supply.”
However, Park explained that since last year's domestic chicken production was 620,000 tons and the self-sufficiency rate reached 83%, the overall impact on the industry is expected to be limited.
Park noted, “In the case of import gaps, it seems possible to partially offset them through imports from third countries or existing stocks,” and added, “The main demand for Brazilian chicken comes from large supermarkets and convenience stores, and since most large chicken franchises use domestic chicken, the direct damage from the import ban will be minimal.” He continued, “The import ratio of Brazilian eggs is also very low, so the impact on domestic food and materials and supplies will be negligible.”
The key issue is whether the import ban on Brazilian chicken will be prolonged. Generally, it takes about two months from slaughtering to raising and shipping broilers.
However, if highly pathogenic avian influenza spreads to laying hens, the period of the import ban is bound to be extended. For laying hens, it takes at least six months to normalize after slaughtering. Park stated, “The reason for the prolonged damage caused by avian influenza in the United States was also due to the significant impact on laying hens at the time of the outbreak.”