High production rates in the first half of the year and reduced demand before the beginning of autumn led to a drop in wholesale prices for poultry meat at the end of August below last year's levels. The profitability of market participants is supported by low prices for feed grain. But in the future, the trend may lead to a reduction in investment in the industry.
Wholesale prices for a broiler carcass in central Russia in the week of August 22-28 decreased by 1.5%, to 136 rubles. per 1 kg, falling below last year's values, when the product cost about 140 rubles. for 1 kg. This follows from the monitoring of the National Union of Poultry Breeders (NSP), which Kommersant got acquainted with. In 2021, since the end of June, wholesale prices for broiler carcasses have been continuously growing, remaining above previous periods. The NSP declined to comment.
Management Company Trust-Poultry Assets (managed by the Healthy Farm Group) confirmed the dynamics, linking it to the growth in the production of animal proteins, primarily chicken and pork. According to the Ministry of Agriculture, in the first half of 2022, poultry meat output increased by 5.8%, to 2.5 million tons, pork - by 5.7%, to 2.1 million tons year-on-year. Large producers of poultry meat are the Cherkizovo group, Miratorg Agro-Industrial Holding, Agrocomplex im. N. I. Tkacheva, Prodo Group of Companies, Prioskolie and GAP Resurs did not provide comments.
Andrey Dalnov, head of the Center for Industry Expertise of the Russian Agricultural Bank, notes that the decline in prices for a broiler carcass at the end of August is not a typical picture. Growing volumes of meat supply have a deterrent effect on prices in all segments, he confirms. A Kommersant source on the market adds that the second half of August and the first half of September are considered one of the most difficult periods in the meat market. Part of the demand goes to incoming seasonal vegetables, and a number of consumers save money in preparation for the school year, he points out. Director General of the National Union of Pig Breeders Yuri Kovalev adds that the growth in production also affects the dynamics of prices for pork. By August 22, this meat in wholesale cost an average of 118.92 rubles. for 1 kg against 123.51 rubles. for 1 kg a year earlier, according to the NSS.
Magnit noted a decrease in the cost of chicken during this year and says that current retail prices are in line with last year's values. On the Perekrestok online storefront, a broiler carcass costs from 143.99 rubles. for 1 kg. According to a Kommersant source in the industry, poultry meat producers were counting on an increase in the cost of production after the high summer season, but this did not happen.
Trust-Poultry Assets Management Company hopes for price stabilization in the fourth quarter and a comfortable level of feed cost associated with a good harvest this year. A Kommersant source in the industry confirms that low prices for feed grains make it possible to maintain the profitability of poultry farming. In the Volga region, quotes from a number of buyers dropped to 6 thousand rubles. per 1 ton (see Kommersant dated August 29), in the center the cost of feed wheat is estimated at 8.5-12 thousand rubles. for 1 ton.
Andrey Sizov, the director of Sovecon, points out that the domestic poultry market has long been saturated, and it is worth expecting additional investment in the industry only in projects with a clear export development plan. But due to the strengthening of the ruble, deliveries abroad are now complicated, he notes. According to the expert, against this background, an increase in M&A in the poultry industry is possible due to the desire of some players to leave the difficult market, although the inertia in the industry is quite large and, in general, the state of market participants should be quite good for now.
Andrey Dalnov expects poultry prices to stabilize close to the achieved levels with a slight seasonal increase in December. According to him, in order to minimize price risks, market participants should think about the distribution of sales through various channels, the development of a network of distributors in various regions and the expansion of the assortment through semi-finished products and sausages.
