Brazil’s meat industry association ABPA said a “perfect storm” of health and food security concerns in China promises to drive up demand for Mercosur meat, giving Brazilian meatpacker shares a boost.
China reported a new outbreak of bird flu on Saturday while millions of chickens face the prospect of starvation amid a lockdown in Hubei province, near the epicenter of the coronavirus epidemic.
That comes as Chinese meat suppliers are still grappling with the lasting effects of African swine fever (ASF), which decimated a major portion of the country’s pig population.
“ASF, coronavirus and bird flu influence consumer habits and may drive Chinese demand for Brazilian meat,” Francisco Turra, president of ABPA told the media.
“Our representatives in China tell us that there are major concerns over food security.”
Brazil stands to benefit as a safe source of meat, having never had a case of bird flu or African swine fever, he added.
Brazil has capacity to step in to cater to at least some of the additional Chinese demand for imported poultry, having processed some 6 billion birds last year, Turra said.
Shares in the world’s largest chicken exporter, BRF SA, rose 6% in São Paulo trading before paring gains to 3.4%, while shares of rival JBS SA rose 3.7% before falling back to 2%.
Hubei’s poultry association forecasted that the lockdown of the province threatened more than 300 million chickens due to an imminent shortage of feed.
Turra said the threat comes as China has been trying to increase local poultry output to substitute for pork, whose production has suffered due to swine fever.
Before the problems associated with the coronavirus and bird flu, China had been expected to produce some 12 million tons of chicken this year and Brazil around 14 million tons, Turra said.
Last year, Chinese imports of Brazilian chicken rose 34% while its imports of Brazilian pork jumped 61%, according to ABPA figures.