Brazil on Monday (May 22^nd) declared a state of animal health emergency for 180 days in response to the country's first ever detection of the highly pathogenic avian influenza virus in wild birds, in a document signed by Agriculture Minister Carlos Favaro.

Infection by the H5N1 subtype of avian flu in wild birds does not trigger trade bans, based on guidelines of the World Organization for Animal Health. However, a case of bird flu on a farm usually results in the entire flock being killed and can trigger trade restrictions from importing countries.

Brazil, the world's biggest chicken meat exporter with $9.7 billion in sales last year, has so far confirmed eight cases of the H5N1 in wild birds, including seven in Espirito Santo state and one in Rio de Janeiro state.

The country's agriculture ministry said later on Monday (May 22nd) it has created an emergency operations center to coordinate, plan and evaluate "national actions related to avian influenza."

Though Brazil's main meat producing states are in the south, the government is on alert after the confirmed cases, as avian flu in wild birds has been followed by transmission to commercial flocks in some countries.

Shares in Brazil-based BRF SA (BRFS3.SA), the world's biggest chicken exporter, were up 3.6% before the government announcement and ended the day 0.5% lower.

According to the General Administration of Customs' system for registering information on overseas production enterprises for import and export, there are currently 46 poultry factories in Brazil that are eligible for effective exports to China.

These factories are located in the states of Paraná, Santa Catarina, Rio Grande do Sul, São Paulo, Mato Grosso do Sul, Mato Grosso, Minas Gerais, and Goiás.

According to the Brazilian Ministry of Agriculture and Livestock, eight cases of avian influenza infection have been detected in wild birds in Brazil so far. Seven cases occurred in the state of Espírito Santo, and one case occurred in the state of Rio de Janeiro, which is adjacent to Minas Gerais and São Paulo. None of the states where avian influenza outbreaks in wild birds have occurred have poultry processing factories approved for export to China.

In 2022, Brazil exported a total of 553,314 tons of poultry meat to China, ranking the first and the largest poultry meat source country of China. Since early this year, three countries, Chile, Turkey and Argentina have been suspended exporting to China due to HPAI, increasing prices of imported poultry products a lot. Although the market now cools down, if the situation happens in Brazil too, its poultry futures and spot prices are believed to be affected.

Source: OIG Research