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EC issues warning of “downward pressure” on poultry meat prices

Colin LeyBy Colin LeyOctober 12, 20163 Mins Read
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A warning that EU poultry meat prices might continue to experience downward pressure in response to slowing domestic consumption, alongside supply competition from Brazil and the US, is the core message in the latest short-term outlook published by the European Commission (EC).

Covering market prospects for the remainder of 2016 and the whole of 2017, the EC report reveals that despite lower broiler prices at the beginning of this year, EU poultry production grew by 6% during the first half of 2016.

All major producing member states, except France, have reported an increase: Poland (+15%), Spain (+8%), Italy (+6%), the Netherlands (+5%) and the UK (+4%). France, meanwhile, has been focusing on restocking after the outbreak of avian influenza.

“Overall, EU poultry production is expected to grow by 4% in 2016,” stated the report, noting that the current lower EU prices might lead to a slowdown in the production increase in the remaining months of the year.

“However, this production rise follows two consecutive years of 4% growth already. As consumption in the EU is reaching a more mature level and competition on the world market from Brazil and the US limits further development of exports, prices might continue to experience downward pressure.”

As a consequence of reducing EU prices, however, the prospects for increased export activity still look relatively good, going forward. Already, in fact, during the first seven months of this year, EU poultry meat exports have increased by 8% year-on-year.

“The bigger export increases (to date) were recorded for South Africa (+44%), the Philippines (+28%), Hong Kong (+33%) and Ukraine (+48%),” stated the report, with the Chinese market being described as a potential “game changer” in the future as domestic production there is decreasing due to a lack of breeding stock.

“Therefore, Chinese imports are likely to increase, giving opportunities mainly to Brazilian poultry meat exports as they are already currently the largest supplier. Nevertheless, some EU countries with direct access to the Chinese market such as Poland might also benefit from this situation, while US poultry exports are not yet back on track compared to last year (-5%), due to the strong US dollar.”

EU poultry meat imports, meanwhile, increased by 6% in the first half of 2016, mainly due to an increase in imports from Brazil and Chile, which doubled its exports to the EU.

“Even though EU production is relatively abundant and exports are increasing, imports can increase as well because the EU typically exports low value cuts while importing higher value cuts,” stated the report.

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