December 18, 2014

Bird flu, trade restrictions to rock poultry industry through 2015,  says  Rabobank

Bird flu outbreaks and trade restrictions are issues that will continue to hound 2015, according to the 4th-quarter report on the poultry industry of agricultural lender Rabobank.

During the last quarter of the year, several outbreaks of avian influenza were reported in EU countries including Germany, the Netherlands and Britain, as well as in Canada, India and even Russia. Bird flu outbreaks were also reported this year in Egypt, East Asia and Mexico.

"A key concern for the coming months is the spread of avian flu, which has become a global issue in recent months. Several avian flu strains are already endemic in several parts of Asia and Mexico, and the disease is increasingly spreading globally via wild birds," Rabobank´s Nan-Dirk Mulder said.

The Rabobank's latest poultry report also states that trade restrictions including Russia's import ban on US and EU poultry meat, "will lead to ongoing record high prices and margins in Russia."

It says the avian flu outbreaks in Northwest Europe are a "big wake-up call for the Russian industry as markets have been highly affected by import restrictions on day-old chicks and hatching eggs as Russia depends on 15% of total hatching egg supply on imports mainly from these countries."

"Although Russia is now re-opening imports of hatching eggs and day-old chicks from non-affected regions in these countries, a future supply risk for Russia will remain and any outbreak in Northwest Europe can affect future market conditions significantly especially if this happens in the Netherlands," Rabobank said.

Rabobank said Brazil, whose poultry farms have remained relatively free from avian flu outbreaks, would emerge as a "big winner" as it strengthens its export position in Russia and captures the US and EU export market shares. 

Rabobank also noted that global industry margins remain bullish on "ongoing strong markets and low feed prices", adding that global poultry trade prices are expected to remain stable after declines in recent quarters.