NEW YORK – Exporters should expect stiff competition within the global poultry trade as the United States returns to many poultry markets, Rabobank said in its Poultry Quarterly Q2 2016 report.
An outbreak of highly pathogenic avian influenza that began in 2014 claimed more than 48 million birds by June 2015. Commercial poultry operations in 14 states were impacted by the outbreak. But the US poultry industry’s quicker-than-expected recovery has some poultry exporters on the defensive, according to Rabobank. Brazil and the European Union are “…aggressively defending market share via price concessions, and prices for poultry have been reduced by up to 20 percent,” Rabobank said in its report.
“We believe this situation will continue, with expected supply shortages in Asia and Mexico offsetting some of the negative impacts of price concessions,” said Nan-Dirk Mulder, animal protein senior analyst. “Outside of these trade battles, market conditions are more favorable — in balanced markets, companies are receiving good margins.”
Improved seasonal demand in the second and third quarters, along with rising Asian and Mexican imports and recent FX [foreign exchange] changes should provide some relief, according to Rabobank.
Indonesia, India and South Africa currently are making good margins, with Indonesia benefitting from a culling program, while South Africa experiencing a strong El Niño impact on local supplies of poultry, Rabobank said in its report. A key strategy for Mexico, the European Union and the US will be to maintain market balance, Rabobank said, because deteriorating global market conditions can rapidly impact local market conditions.
Brazil is struggling to balance markets as persistent weak local and global market conditions combined with high prices for feed threaten to reduce growth, Rabobank said in its report. However, Brazil’s poultry industry has shown that it can be disciplined which should help recovery.
China’s poultry has made positive margins as breeding stock trade restrictions have resulted in a 20 percent reduction in supplies of white broilers, according to Rabobank. However, other markets in Asia are expected to feel the impact in the second half of 2016, which could spur more exports to China and South Korea, with more pressured supply from Thailand.