October 3, 2017

Global poultry sector performs strongly in Q2 - report

The global poultry industry performed relatively strongly in the second quarter, with significant increases in poultry prices due to improved demand and to supply restrictions, according to the latest poultry quarterly report of Rabobank.

"The industry is currently benefiting from improved market conditions after avian influenza (AI) pressure has reduced significantly, following the northern hemisphere winter months, even though it has not moved away fully", said Nan-Dirk Mulder, senior analyst - Animal Protein.

He added that the "relatively tight supply in the aftermath of the first-half perfect storm, caused by bird flu and the Brazilian tainted-meat scandal, was another positive for the global poultry industry. However, demand is recovering as avian influenza has faded from the headlines".

The "Poultry Quarterly Q3 2017" report noted that China has recovered quickly after the bird-flu crisis in the first half. "Although new cases of human AI cases are still occurring (at a slower pace), demand recovery, together with very tight supply caused by GP (green procurement) import restrictions and environmental regulations, has shifted market conditions and lifted prices", it said.

The report also said that Brazil, which reeled from the tainted-meat scandal in the second quarter, has regained market share in global trade, with the latest monthly export figures matching last year's record levels.

According to the report, global meat trade was hit hard (down 5% year-on-year) by the first-half perfect storm. "The big winners have been Thailand and the US, which gained market share against Brazil, the EU and China, due to the Brazilian meat scandal and AI-related trade restrictions in EU and China".

The outlook for the global industry was seen to remain strong, with ongoing tight supply expected in most markets, as a result of avian influenza outbreaks in the first half and their possible return during the northern-hemisphere winter.

"The possible return of AI will also keep challenging global trade, as could some other issues, such as the China-Brazil anti-dumping investigation", the agricultural lender said.