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The poultry market’s rollercoaster ride is a gift that keeps giving. Broiler chicken (live) prices, which had climbed up to Rs 500 per kg last month, have witnessed a spectacular fall in recent weeks. In fact, a week into the peak demand month of Ramzan, prices have declined by Rs 100 per kg on average nationally, clocking in lowest prices since the beginning of calendar year 2023.

Historically, Ramzan, Eid-ul-Fitr, and winter wedding weeks are among the top three peak demand seasons for poultry meat, when prices rise by as much as 50 percent above 12-month rolling average. Yet, poultry prices currently appear to be declining right now against all odds. Regular readers would recall that after the federal government banned import of GMO soybean (poultry feed input) during Q4-2022, poultry industry had claimed that bird meat prices shall skyrocket come Eid ul Fitr 2023.

As a matter of fact, broiler prices did skyrocket after the ban come into effect, rising by nearly Rs 200 per kg Dec 2022 and Feb 2023, nationally – from average of Rs 300 per kg to up to Rs 500 per kg in many urban consumption centers. In fact, if pre-soybean ban prices are taken into account, retail prices still remain at elevated levels, and have more room to fall by nearly another Rs100 per kg. However, feed industry insiders insist the GMO soybean ban remains well in place, indicating no respite for producers on the inputs side.

This raises two important questions. First, what explains the ongoing decline in market prices? And, whether prices will fall back to pre-ban territory in absence of any change in fundamentals? To answer the first, look towards prices of Day-Old-Chicks (DOCs).

This section has long held that DOC prices are a reliable forward-looking indicator for bird meat prices. One DOC crop takes anywhere between 6 – 8 weeks to be raised and fattened into ready to be culled birds. Over the last four weeks, DOC prices have declined from the peak of Rs85 per chick to just Rs15 per chick till last weekend, a massive fall of Rs 70 per unit. In fact, DOC prices are currently at their lowest level since mid-June 2022, when chick prices fell in anticipation of Eid-ul-Azha, when demand for bird meat typically ebbs seasonally.

It appears that DOC farmers invested with full force in anticipation of Ramzan and chohti Eid demand. In fact, DOC farmers may have succeeded in profit-taking well up to mid-March 2023 when chick prices still hovered above Rs 70 per unit, significantly higher than their cost of production. Current DOC prices reflect bird flocks that will mature once peak demand week of Eid-ul-Fitr is long past. A sizable decline in broiler meat demand due to abnormally high prices despite peak demand season may have helped restrain retail prices, in turn signaling a marked decline in demand for DOCs, crashing the chick market in less than two weeks.

But if DOC prices persist at current levels any longer, it may become likely that farmers will once again scale back production, especially since the upcoming months of Eid-ul-Azha and Hajj signal a demand slowdown. At that point, bird meat prices may once again bounce back, possibly to peak levels seen just a few weeks ago.

Until the poultry feed value chain is fully restored, there will hardly be any change in market fundamentals that could signal normalization. Unfortunately, that means more price volatility – both for producers and consumers. The current respite in poultry prices is real, but may not last for too long.

Comments

1000 characters
KU Mar 30, 2023 04:50pm
Poultry farmers would be the best people to answer the low DOC prices, but one thing is certain, they are facing difficulty maintaining their businesses due to the lopsided cost of production. The availability of low-cost meat to the people is becoming increasingly unaffordable because of the government's lack of interest or resolving issues faced by this industry. In any case, poultry farmers should be appreciated for keeping their businesses afloat in the market.
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Saleem zaidi Mar 31, 2023 07:24am
As long as government policies are concern they haven't any moment to think over the miserable conditions of poor masses as well as production side farmers. There is no check in the market prices. Only a what's app performance is entertained in higher offices.
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Safrankhan Mar 31, 2023 09:52am
Excellent view
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Muhammad Ali Mar 31, 2023 10:28am
GOP has one assignment only. How to bring back Family PVT Ltd., back into full power.
thumb_up Recommended (0) reply Reply
sultan ali Apr 05, 2023 06:50am
Use of soybean meal not required as thy are imported wehave our fish meal better than soybean meal.
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