Global poultry demand likely to increase as African Swine Fever tightens pork markets

Demand for poultry meat is likely to receive a short term boost, in response to the spread of African Swine Fever affecting the supply of pork, according to analysts at Dutch investment bank Rabobank.

However, the effects are likely to be limited and unstable, according to the report Poultry Quarterly Q4 2019: Challenging Global Supply – Rising Dark Meat Prices, Low Breast Meat Prices.

“Some market upside is expected to come from rising prices and demand substitution, given the impact of African Swine Fever on global pork markets,” according to Nan-Dirk Mulder, senior animal protein analyst. “However, upside for the global poultry industry will be limited in the short term.”

The report also details key concerns, such as the ongoing oversupply situations in many global markets, like the EU, US and South Africa. Only disease-affected China and Mexico, and Brazil (due to the combination of supply reduction and improved export demand), are performing relatively well, the report states. Other markets are suffering from oversupply. Therefore, more disciplined supply should be the key to returning to profitability for the global poultry industry in 2H 2019. 

China buys relatively small volumes in global markets – mainly consisting of special dark meat cuts like feet, legs and wings. Breast meat is not a preferred product in China, and although demand for locally-produced breast meat may increase, there will be no interest in global traded breast meat as the price difference is too big.

Countries with access to ASF-affected China and Vietnam will see some better prices for dark meat, but a weak global demand for breast meat remains the key concern for global companies, as for many industries this is the profit maker. In addition to the direct trade impact, there will be indirect price support for poultry industries in countries where the pork sector has good access to China, like the EU and Brazil.

The main focus for global companies should be on restoring fundamentals through more disciplined supply growth in the coming months, the report states.

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