August 4, 2006

Sadia: Chicken prices to return to historic norms

Brazil's top chicken company, Sadia (SDA), said Thursday (Aug 3) that the company suspects whole chicken prices to return to historical averages by the end of the third quarter, the local Estado newswire reported.

Sadia's chief financial officer, Luiz Murat, told equity analysts Thursday that whole chicken prices would increase faster than processed chicken meat prices. Whole bird prices have fallen considerably ever since bird flu was reported in Europe, Asia and Africa.

The Foreign Trade Ministry reported Wednesday that international buyers paid an average of US$1,094 per tonne in July compared with US$1,083 in June, but down from US$1,197 in Jul 2005. Export volume fell to 178,200 tonnes in July compared to 185,200 in June and 254,800 in Jul 2005.

Murat said the company will continue lowering production of chicken meat in an effort to control chicken stocks, but expects demand to return soon.

Murat said he expects Russia to re-open its market to chicken meat processed in the southern Brazil state of Rio Grande do Sul this month. A Russian animal health inspection team is currently in Brazil. Roughly 18 percent of Sadia's chicken exports come from Rio Grande do Sul, the newswire reported.

Sadia posted a second-quarter net profit of 17.5 million Brazilian reals (US$8 million), down sharply from 144.5 million reals in Q2 2005, the company said late Wednesday in a statement.

"Due to the impact of bird flu in Europe, Asia and Africa, along with Russia's ban on Brazilian pork meat, the second quarter was one of the most difficult periods for us in recent years," the company said in a statement.

Sadia results were below analyst forecasts, which had focused on a net profit figure of around 31 million reals.