July 12, 2022

 

Rabobank expects poultry market to face soaring input costs and tight supplies

 

For the second half of this year, Rabobank expects the global poultry market to face soaring input costs and tight supplies, as Nan-Dirk Mulder, senior analyst of animal protein at Rabobank, said the industry will be affected by high feed costs and energy prices because of inflation, labour issues, and the impact of bird flu, Food Business News reported.

 

Prices for soymeal, a key ingredient for poultry feed, is up by 60%. Feed prices are predicted by Rabobank to remain high but drop from their second quarter peaks.

 

The significant impact of bird flu on the world's poultry industry was also noted by Rabobank. 53 million birds were killed during the highest-pressure bird flu season ever in Europe. In the months that followed, the virus's arrival in the US resulted in 38 million birds killed. Russia, Mexico, the Philippines, Japan, and the Philippines have all seen outbreaks.

 

Mulder said the tight supply is one effect, as small and midsize producers are scaling back due to increased risks and working capital needs. He said given the increase in investment costs, including high steel prices, rising interest rates, high logistical costs, and a limited labour supply, new investment projects have been delayed.

 

Despite this, there is still a high demand for poultry because many consumers prefer chicken to beef products.

 

Mulder said more people will switch to chicken as a result of weaker economic growth and decreased consumer confidence, which are partly caused by Russia's invasion of Ukraine.

 

Rabobank predicted a 0.5% to 1% increase in production for 2022, significantly below a normal year's growth of around 2.5%.

 

Countries like Mexico, Qatar, Egypt, and Sri Lanka are temporarily removing import restrictions due to high import demand. In order to show its support for Ukraine during the war, the EU is also removing import restrictions on Ukrainian goods.

 

Mulder said the robust global demand for imported chicken is occurring in a very challenging trade environment with bird flu related restrictions, high logistical costs, and constrained container availability.

 

He said due to the high demand in Q1 2022, Brazil and the US fare best under these circumstances, but the EU has lost market share due to numerous bird flu outbreaks and associated trade restrictions. Thailand is improving, but due to its high local prices, it is still relatively expensive.

 

-      Food Business News