PETALING JAYA: Bursa Malaysia-listed companies in the poultry industry saw their share prices rise, riding on news that chicken prices can be floated according to the market from July 1.
The share price of Leong Hup International Bhd rose two sen to close at 53.5 sen, while Lay Hong Bhd jumped 1.5 sen to 28.5 sen, QL Resources Bhd was flat at RM5.10, Teo Seng Capital Bhd rose four sen to 81 sen and CCK Consolidated Holdings Bhd was up three sen to 59 sen.
Rakuten Trade head of equity sales Vincent Lau said the government’s decision was a positive one as it benefits the poultry industry and the government as well as the chicken supply ecosystem.
“This relieves some margin pressures on the poultry-related companies, especially the smaller ones. The government also benefits with lower subsidies. The chicken supply situation should improve as market forces will determine supply and demand,” Lau told StarBiz.
Regarding food price increases, Lau said it was inevitable due to global issues such as high crude oil prices and the Ukraine-Russia war.
“However, the government has announced additional targetted assistance via Bantuan Keluarga Malaysia,” he pointed out.
Meanwhile, Centre for Market Education CEO Dr Carmelo Ferlito said the government’s decision is a good move and “absolutely needed – and it even came later that it should have been.”
Ferlito told StarBiz that obviously, this will contribute to food price increases (inflation is a different thing), but the economy is not something that can be reversed.
“The current mismatch between supply and demand in the poultry sector is a result of lockdowns; if we did not want to reach the current point, we should have avoided lockdowns. Now the eggs are already scrambled,” he explained.
Ferlito noted that consumers need to accept temporary high prices, so that the supply can step up to meet increased demand.
“This is the only way we have ahead for prices to normalise,” he said.
Ferlito added that when prices are let free to go up, a signal is sent to the producers that profit opportunities are waiting to be exploited.
“It won’t happen overnight, but the stabilisation will happen,” he said.
Ferlito pointed out that however, there is a part of generalised price hikes which is not due to supply chain disruptions.
“This is inflation created by the excess of money supply injected in the system over the past two years. So, the general level of prices is going to remain on an upward trend as far as the quantity of money is not gradually cut,” he said.
On Tuesday, Domestic Trade and Consumer Affairs Minister Datuk Seri Alexander Nanta Linggi was reported as saying the price of chicken is expected to go up to around RM10 per kg after July 1 when the ceiling price is removed.
Nanta added that livestock farmer groups have told the ministry that even though chicken prices will increase, they have given their assurance that it will not go up exponentially.
“The livestock farmer groups told me that chicken prices will indeed go up a bit after the subsidy is removed. It will be around RM10 or so per kg, but it won’t be as high as RM12.50 per kg,” he said.
The maximum price scheme for chicken and eggs was implemented last February 5 and had been scheduled to end on June 5, but the government extended the deadline to June 30. Currently, the ceiling price for standard chicken is set at RM8.90 per kg in Peninsular Malaysia.
Malaysia is one of the largest consumers of chicken globally on a per capita basis. Given the previous low ceiling price, getting imports into Malaysia even though import permits were removed were difficult as the selling price of chicken was higher in neighbouring countries.