A bird flu outbreak in Brazil’s key poultry-producing state of Rio Grande do Sul has forced dozens of countries to suspend chicken imports, potentially creating a domestic oversupply that could temporarily lower meat prices—a rare silver lining for consumers battling 12.3% annual food inflation. But economists caution the relief may be fleeting, with risks of deeper disruptions if the outbreak spreads.
Why Prices Could Drop (Briefly)
🍗 Export Bans: Major buyers like China, the EU, and Japan have halted shipments from Rio Grande do Sul (which produces 12% of Brazil’s chickens), forcing producers like BRF and JBS to redirect meat domestically.
📉 Glut Fears: Analysts at XP Investimentos warn of short-term oversupply, with consultancy MB Agro estimating 5–10% price dips if bans last weeks.
💰 Political Boost: Food inflation (up 7.8% yearly) has hammered President Lula’s approval ratings ahead of 2026 elections.
The Catch: Risks Loom Large
⚠️ Production Cuts: If prices fall below costs, farmers may slash output, reversing any deflationary effect.
🐔 Outbreak Escalation: Uncontained spread could trigger mass culling, squeezing supplies and reigniting price spikes.
🌎 Trade Chaos: The World Organisation for Animal Health backs regional bans only, but key importers may keep broad restrictions.
Market Reactions
🇧🇷 Domestic Whiplash: Chicken prices had surged 12.3% year-on-year before the outbreak (IBGE data).
🛑 Export Scramble: ABPA says 30% of Brazil’s chicken production is exported; rerouting to new markets will take time.
📊 Analyst Split:
- Optimists: “A small, temporary price drop” (MB Agro).
- Pessimists: “Risk of net inflationary shock if culling expands” (FGV Ibre).
What’s Next?
- Containment Watch: If zoning succeeds, bans may ease by late June.
- Political Calculus: Lula’s team will tout any price relief but fears long-term agribusiness fallout.
- Global Ripple: Brazil supplies 35% of world chicken trade—prolonged disruptions could lift global poultry prices.