Poultry Sector Outlook

Corn harvest outlook in Sulawesi should be good enough despite El-Nino

The downdraft in El-Nino reflects our wider concern about crop failure in South East Asia. Based on our latest ground checking to farmers in South Sulawesi, monthly avg. corn price in South Sulawesi has increased by approx. 15% over the last three months from Rp3,200/kg to Rp3,700/kg. However, we do not expect lack of supply as the corn export sales volume during 1H15 to jumped 3x-4x compared to last year at same period.

Massive grand-parent stock cut

Multiyear problem in the supply side is slowly anticipated; then is expected to persist. We do not see any substantial government action yet to limit import of great grandparent stock (GGPS) and grandparent stock (GPS). However, on the positive side, Government has claimed that 12 poultry breeding companies have agreed to participate in a GPS culling program. The proposed total culling program is 6 mn GPS where the initial stage will cull 2 mn GPS this year. It was decided that Charoen Pokphand to cull the most, approx. 59% of the total culling program.

Cheapest protein content

Having a devastating moment this year, we expect demand to pick up in 2016 as consumer purchasing power continues to rise, and as the country’s number of middle-income families continues to increase. Chicken (broiler) meat with Rp29,000/kg (retail price) contains 18.5% of protein or 157/gr. As a result, chicken meat has the advantage compared to beef as the cheapest protein source and the second biggest protein content.