Shares in Thailand's poultry manufacturers rose on Tuesday after Saudi Arabia granted permission for chicken exports to the country, ending an 18-year ban caused by diplomatic dispute. |
Charoen Pokphand Foods Plc (CPF) rose by 2.5 per cent in the morning session. GFPT Plc (GFPT) and Bangkok Ranch Plc (BR) also saw the rise.
The Thai government announced this week that Saudi has lifted the ban on imports of chilled and frozen fresh chicken from 11 factories in Thailand, including six from CPF, and one from GFPT and BR.
Commerce Minister Jurin Laksanawisit said that "Thailand will have the opportunity to earn more market share in Saudi Arabia." He also instructed related agencies to prepare chicken shipments to Saudi while having the least impact on domestic prices.
At present, Saudi Arabia imports 590,000 tonnes of chicken annually, 70 per cent of which comes from Brazil and the remaining 30 per cent from Ukraine and France.
An analyst at KGI Securities, Tidarat Palodom, said in a research note that the impact in the short term shall be limited owing to market competition.
"The main competitor (Brazil) has a competitive advantage in terms of lower feed cost as the country is a major soybean and corn producer."
However, in the long run, KGI said the permission given to Thailand is a good opportunity for the country's poultry industry, as Saudi Arabia is the fifth largest chicken meat importer in the world.
Tidarat added that concern over higher feed cost emerging from the supply chain disruption from the Russia-Ukraine conflict could pose an impact on the meat industry as well. "We are assessing the impact on meat prices and meat producers' margins."