Russia-The poultry market.

RUSSIA: Poultry Market Condition in Q1 of 2009.

24 ap

The following key factors should be specified among the other determining Russian poultry market development in the first quarter 2009:

- Continuing economic growth in domestic poultry production industry. Production growth rates remain high. In January-February 2009 poultry meat production was up 13.3% from the corresponding period last year.

- At the same time within the economic downturn growth rates go gradually down: 15% - January 2009 from January 2008, and 11.5% - February 2009 from February 2008. Pursuant to the IKAR estimates, the March growth rate reached only 8.7%.

- Significant import volume reduction: for the first two months (clean data) imports were down 38.5% from the corresponding period last year, and by 46.6% for the first quarter (including the preliminary data for March), if compared with the same period last year. – In the first quarter domestic meat production increase totaled to 65% which offset the plunge of imports.

Poultry production costs are growing constantly, but taking into consideration the fall cut in prices for feed and rise of prices for poultry, there is a big room for cost effectiveness.

- As for the demand there are two contrary factors. On one hand, within the conditions of plunge of the total population purchasing power for food there is a switch of demand from red meat to cheaper poultry meat. On the other hand, amid the recent poultry price growth in the country the evidence of the market high saturation appeared in the way that prices have hit the ceiling and their further growth is almost impossible.

- And finally, the factor of key export price change. The export prices for American drumsticks have been growing recently and reached a record high of $0.80 per kilogram in the second half of March. Prices for frozen broilers in Brazilian domestic market were growing till early March, but starting from March 19, they have gone down to $1.16 per kilogram.