March 8, 2013

India's poultry industry rebounds strongly in Q1 2013

The Indian poultry industry has made a strong comeback during the first quarter of 2013, after witnessing one of its worst periods ever in the second half of 2012.

The improvement in the industry's fortunes is driven by lower placement in the fourth quarter as much lower feed commodity prices. Feed commodity costs have stabilised with the fall harvest, the Rabobank report said.

A key reason domestic soymeal prices have been steady lately is due to reduced exports to Iran in recent months. Iran exports in 2012 pushed the Indian soymeal price way above global market prices, challenging the local poultry industry.

"Soymeal exports to Iran rose significantly in the middle of last year, and depending on the sanctions situation in Iran, soymeal imports could rise again in 2013, putting pressure on soymeal prices." the report said.

"Thanks to strong steps taken by the industry and its regulators, the impact of avian influenza outbreaks in the early part of fourth quarter of 2012 was controlled. Since the middle of December 2012, poultry prices shot up significantly from the low of INR35 (US$0.64) per kilogramme to INR85 (US$1.56) per kilogramme, a jump of 142%." the report said.

First quarter is thus proving to be a strong quarter of 2013 from a profitability perspective. Driven by current profitability, placement levels are expected to rise and the momentum is expected to spill over into the second quarter.