December 19, 2017

 

'Global poultry outlook positive for 2018, but…'

 

 

The global poultry industry faces a "promising" outlook, but a return of the avian influenza is a lurking possibility, the Rabobank 2018 first-quarter poultry report said.

 

A rising supply of competitive meat proteins like pork and beef is also another challenge for the industry, it added.

 

"The outlook for the global poultry industry for 2018 is promising", said Nan-Dirk Mulder, senior analyst – animal protein at Rabobank.

 

"This promising outlook includes ongoing demand growth in most markets, except China, and low(er) feed prices in the first half of 2018, if not longer. But a disciplined supply growth strategy will be needed, especially as uncertainties are rising."

 

He cited as main concerns for 2018 a return of bird flu during the Northern Hemisphere winter and the increasingly competitive market conditions due to rising red meat supply.

 

The report noted that global prices for chicken have remained strong, especially for whole chicken and breast meat, but that dark meat prices have fallen. "Competition from red meat will grow next year, amid rising supply and softening prices".

 

The report stressed the importance of supply discipline given that global poultry trade will again be hit by volatility, driven by avian influenza, exchange rate volatility and changes in traders' procurement strategies in response to earlier scandals in trade. New suppliers are also expected to continue to enter the market.   

 

Other report highlights

 

Here are other highlights from the Rabobank report:

 

-- China's industry is struggling, with winter approaching and many wet markets set to close. This situation could negatively affect prices and global trade. The industry needs to further reduce supply to rebalance supply and demand.

 

-- The Brazilian industry is recovering from the tainted-meat scandal, as exports have returned to 2016 levels after significant drops in the second and third quarters of 2017. However, the risk of Brazilian imports being substituted by new suppliers remains.

 

-- The EU poultry industry is performing relatively well, based on a favourable supply/demand balance in the European market (given restricted production growth in the aftermath of avian influenza earlier in 2017), along with constrained growth in northwestern Europe due to environmental regulations, which restrict expansion. Eastern Europe—especially Poland—will keep growing fast, becoming a major trade hub.

 

-- Southeast Asia and Eastern Europe are currently the fastest-growing global regions. South and Southeast Asia will remain very bullish in 2018, with ongoing growth of more than 5% in most countries like Indonesia, India, the Philippines and Thailand, driven by strong local demand and Thailand's clear leadership in global trade. However, recent expansion of the industry, at 7%, has probably occurred a bit too fast, when taking the current margin pressure into account.

 

-- The US poultry industry is expected to keep performing well, driven by ongoing strong local market conditions and improved exports, combined with a predicted record-high US corn and soybean harvest. This will likely push feed prices down.