The best performing regions are the United States, South Africa, European Union, India and Japan. Russia and Thailand have entered an oversupply situation, according to Rabobank, while Brazil is making a gradual recovery following the “Operation Weak Flesh” corruption investigation.
China’s poultry industry is struggling as avian influenza continues to pressure the country’s wet markets. Weak domestic demand and low prices for poultry will drive further reductions in poultry production to rebalance supply and demand, according to the report.
Poultry producers will need to exercise supply chain discipline heading into 2018, Rabobank analysts noted, as avian influenza will continue to pressure the industry.
“AI has become a new business reality and companies in high-risk areas should, and most have, adjust their business models and strategies to this reality,” according to the report. AI remains the biggest risk for the poultry industry during the first half of 2018 due to new outbreaks in the Northern Hemisphere. Other headwinds include higher supplies of competing proteins and declining prices.
“Global trade volumes are expected to grow more or less in line with global poultry market growth, at around 1 percent – 1.5 percent, but volatility should be expected as AI has become endemic in Asia, Europe, parts of Africa, and also parts of North America,” Rabobank said in its report. “Furthermore, prices could be pressured as competition from red meat is expected to rise and traditional exporters like Brazil, the US and the EU (for pork) look for new markets. This could impact global supply trade in terms of prices, depending on supply discipline within the poultry industry.”