Equity Analysis /
Thailand

Thai:Agro & Food - Chicken price on the rise despite govt’s intervention measure

  • 6-month freeze for chicken price; egg price fixed at Bt2.90/piece

  • Government’s chicken price control not workable in the short-term

  • Only modest negative impact on CPF; but none on GFPT and TFG

Bualuang Securities
14 January 2022

We think the government’s measure to fix the prices of wholesale live chicken, eggs and retail raw chicken parts at below current market prices will fail given the current situation of a sizeable supply deficit and rising demand near the Chinese New Year. There is no impact on GFPT and TFG (as they don’t sell live chicken to outsiders) and only a modest impact on CPF (15% of its chicken volume goes to live chicken). Moreover, operators now peg their live chicken price to the market price, not the controlled price. Due to the lack of controlled prices on wholesale chicken parts, they can then peg them on market prices. We are positive on “chicken” with a TRADING BUY call on GFPT, CPF and TFG.

6-month freeze for chicken price; egg price fixed at Bt2.90/piece   

On Jan 11, the Department of Internal Trade (DIT) and other parties such as chicken farmers and Thai Broiler Processing Exporters Association agreed to fix the prices of farmgate live chicken and retail raw chicken parts for six months between Jan-Jun 2022 to tackle the soaring pork price problem which has inflated substitute meat prices. The price of wholesale live chicken is set at Bt33.50/kg, the retail whole fresh chicken (with or without offal) at Bt60-65/kg, thighs and drumsticks at Bt60-65/kg and breasts at Bt65-70/kg. On Jan 13, the DIT and other parties such as the Layer Chickens Association, small-and-large-scale layer chicken operators mutually agreed to fix the farmgate egg price at Bt2.90/piece until the soaring egg price situation normalizes.