NEW YORK – Current trends in the global poultry industry point to a positive outlook for 2013, but the avian influenza outbreak in China could scuttle it all, according to a new report from Rabobank’s Food & Agribusiness Research and Advisory group.

The United States and Brazil posted strong performances in the first quarter thanks to a positive supply/demand balance that offset weak international trade, Rabobank reported. The European Union continues to underperform, challenged by high feed prices and abundant supplies. Meanwhile, Thailand is benefiting from strong demand for poultry products in the EU and Japan. But China’s poultry industry has continued to struggle, according to Rabobank.

“Conditions for the global poultry industry have improved thanks to a further slowdown in feed price growth, which is helping to boost margins,” said Nan-Dirk Mulder, Rabobank poultry analyst. “While we expect this trend to continue, a positive outlook will depend very much on now well the industry can balance its markets and whether the bird flu outbreak in parts of China can be contained. If it were to spread further across the Asian region, we can expect an impact on poultry markets globally.”

The outbreak of the H7N9 virus resulted in collapsing prices, falling demand and large-scale culls of birds with no replenishment stocks, according to Rabobank. Local governments have tried to support the industry via purchasing programs or compensation to growers for slaughtering their birds. China’s poultry industry lost $6.5 billion in the six weeks after the first case was confirmed, Rabobank said.

“The Chinese government has reacted to concerns about the negative industry impact of the outbreak — namely future supply concerns — by implementing a new RMB 600 million breeding program aimed at preventing shortages when markets recover,” according to the Rabobank’s Food & Agribusiness Research and Advisory group. “This support program has led to some price recovery recently, but prices remain low.”

Three factors that have helped the global poultry market include a slowdown in the rise of feed prices, a balance in local supplies and higher prices for other proteins such as pork and beef, according to the report. But the impact of china’s avian influenza problem and global trade developments are “wildcards” for the rest of 2013, Rabobank reported.