Rabobank: Global poultry markets in recovery
Feb. 18, 2016
by MEAT + POULTRY Staff
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NEW YORK – Rabobank reported a positive outlook for margins in the global poultry industry as markets recover from oversupply problems and other issues, including the global threat of avian influenza.
In its Poultry Quarterly Q1 2016 report, Rabobank noted factors driving improvements for global poultry markets include rising demand for poultry, price support from recovering red meat markets and lower supply growth in regions such as the United States, Thailand, China and Europe. Especially significant are restrictions on breeding stocks in China, Thailand and Korea which will reduce supplies of poultry in Asia.
“This will have a strong short-term local and global market impact and will lead to local tight market conditions, increased Chinese imports and pressured Thai exports,” said Nan-Dirk Mulder, animal protein senior analyst for Rabobank.
Potential headwinds for the global poultry industry include avian influenza and volatility in foreign currency exchange markets. “Prices for the main traded poultry cuts have dropped — by 20 percent for breast meat, whole birds and processed, and up to 50 percent for leg quarters,” Rabobank said in its report. “This freefall has now stabilized and will gradually recover, although AI outbreaks in key export markets are a wild card.”
Feed costs will vary by region depending on harvest conditions and foreign exchange rates, Rabobank noted. For example, India and South America face adverse crop conditions, but Brazil and Russia will feel the impact of negative foreign exchange impacts. Brazil faces more than 30 percent increase in feed costs compared to a year ago, Rabobank said.
Brazil and Thailand stand to benefit most immediately, but countries like Malaysia, Russia and Ukraine may change the supply pipeline as they await approval to export poultry products to key import markets. Rabobank also forecast growth in more local poultry breeding programs in Russia and China.