The market lacks chicken carcasses and fillets
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A “physical shortage of volumes” of carcasses and broiler fillets has formed on the Russian market. This is stated in the price monitoring of the analytical agency AD Limited, published on May 25, 2023. The exact size of the deficit is not called.
The lack of volumes was confirmed by the interlocutor of Vedomosti in one of the federal retail chains. A spokesman for a major meat processor also says there is a “redistribution of flows” in the market.
One of the possible reasons is the difficulties for the producers of the Belgorod region, suggests a source in retail. The region is the leader in the industrial production of poultry meat in the country, according to Rosstat data. From January to April 2023, the organized sector in Russia produced 2.17 million tons of poultry meat in live weight, the Belgorod region accounted for 12.1% (264,400 tons).
There are indeed difficulties in the border regions, the representative of the processor confirms: they are connected with the supply of raw materials, ingredients for growing chicken, as well as with logistics.
In the Belgorod region, among other things, the assets of the two largest Russian poultry meat producers, GAP Resurs and Cherkizovo, are located. GAP Resource declined to comment, Cherkizovo did not respond to a request. Other Russian poultry farms did the same.
Another possible reason for the shortage of broilers on the market is the growth of exports, primarily to Saudi Arabia, Andrey Sokolov, senior partner at AD Libitum, believes. According to the IMIT agency, poultry meat exports from Russia in the first quarter of 2023 increased by 4% to 86,200 tons. Saudi Arabia ranks third in imports of broiler meat with a share of 13%. The first two places are occupied by China (36%) and Kazakhstan (16%). In addition, supplies to the annexed territories of Russia increased, which also diverted part of the volume, adds Sokolov.
The reasons may also be subjective, suggests Konstantin Korneev, executive director of the agricultural consulting company Rincon Management. The problems of some producers with the fulfillment of contracts could cause counterparties to feel a trend in the market and desire to stock up on raw materials for future use. Which provoked the emergence of a rush demand and, as a result, an increase in prices, Korneev concludes.
From May 22 to May 25, the cost of a broiler carcass in wholesale increased by 9% to 175 rubles. per kg compared to a week earlier, according to AD Libitum data. This is 27% more expensive than in the same period a year earlier, and the highest figure since the beginning of observation in 2015. Fillet has risen in price by 4% over the week to 275 rubles. per kg, which is also a record figure for eight years.
At the same time, seasonal factors should no longer operate in the formation of prices, says IMIT Commercial Director Lyubov Savkina. But, she continues, carcass prices are supported by the hype arising from outbreaks of bird flu and warnings that many poultry farms are reducing production due to wear and tear of imported equipment, for which they cannot purchase parts (Vedomosti spoke about difficulties with equipment 26 April). According to Rosselkhoznadzor, 40 outbreaks of bird flu have been recorded in Russia since the beginning of the year.
The drop in supply volumes could also arise due to a decrease in poultry stocking density by poultry farms in anticipation of lower prices, Andrey Sokolov believes. A broiler carcass has been continuously depreciating from the end of September 2022 to the beginning of March 2023 – to a low point of 123 rubles. per kg. This may lead to the fact that, according to the results of May, statistics will record stagnation or even a decrease in production, the expert suggests.
Meat processors continue to work without interruption, says Ekaterina Luchkina, director of the Association of Meat Processors (ASOMP). According to her, slaughter at poultry farms also does not stop, because poultry farmers cannot wait for good prices or other conditions. But she agrees that the demand for chicken has really grown – this was influenced by both seasonal factors and the reorientation of meat producers to chicken in 2022. At that time, its cost was significantly lower than pork, and producers sought to reduce the cost of their products.
High prices for broilers will force producers to expand the supply of poultry to the domestic market, which will increase supply, Sokolov is sure. He also predicts that within one to two months, processors will be able to tweak their processes to increase the proportion of pork in the recipe. This will reduce the demand for chicken, which will stabilize the situation with both volumes and prices, the expert believes. Luchkina also believes that there are no serious problems, and processors can currently respond to increased demand and redistribution of flows by shifting the recipe in favor of pork.
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