May 31, 2013

Due to holiday period, the demand for poultry products in India is likely to remain strong in the April-June period of this year.

"Poultry demand continues to remain strong in second quarter (April-June) with the holiday season setting. ... If demand and supply is not moderated correctly, third quarter could prove to be the most challenging part of the year," Rabobank said in the report.

The market is currently well balanced in terms of supply and demand, although profitability in the first quarter was still below the four-year historic average, it said.

During the January-March period, poultry prices in India reached historic highs of more than INR90 (US$1.60) per kilogramme. However, prices softened in March with increased supply but started to recover in April, it added.

On poultry feed, the report said the prices of corn have declined since the beginning of 2013 but the benefit of reasonable poultry prices was negated by an increase in soymeal prices.

Soymeal prices in the domestic market increased sharply to INR38,000 (US$674) per tonne from INR27,000 (US$479) per tonne in February last year, driven by shipments to Iran. "If the trend continues, the industry will continue to face challenging times due to higher soymeal prices," it said.

On soy production, from which soymeal is made and used as poultry feed, the report said the increased support price should result in higher production, but the status will be known in the October-December period of 2013.

The report further said the government has clarified that import of genetically modified soymeal are allowed into India. Also, the industry is mulling import of meal as global prices are lower than the domestic market.