Global poultry industry: improving local industry performance and shifting trade flows

Rabobank’s latest poultry report indicates the outlook for the global poultry industry continues to improve, especially for locally focused industries. This is mainly driven by the reopening of economies, and the recovery of global, regional, and especially foodservice demand, which, on average, makes up one-third of global poultry demand. As supply usually responds slowly to such increases, significant price inflation in the second half of 2021 is possible, especially as feed prices remain high and avian influenza has disrupted global trade of breeding stock.

Strong local market conditions are expected in the US, Mexico, Japan, and Russia, driven by strong demand and relatively lower supply growth, or even declines. Europe and South Africa will also likely see better conditions, due to stronger demand and, in Europe, lower production.

The most challenging and uncertain conditions can still be found in China, Brazil, and India. “The outlook for China will also impact global trade conditions. Increasing local meat supply is impacting meat prices significantly, and this will have knock-on effects on global trade in terms of prices and volumes,” said to Nan-Dirk Mulder, Senior Analyst – Animal Protein at Rabobank. This is not good news for Brazil, as China has been one of few global growth markets for Brazil.

“Global trade flows are shifting, with less focus on China, due to local supply growth, and the Middle East, due to food security ambitions, and more focus toward northeast Asia and Europe,” said Mulder.

Global trade has been highly impacted by COVID-19, with quarterly trade volumes down by 5% to 10%. Improved market conditions in Europe, northeast Asia, and Mexico will help trade flows to recover in these regions. This should offset more difficult trade conditions in China and the MEA region, resulting from local African swine fever recovery and food security ambitions, respectively.

Feed prices are expected to stay high, although slightly lower than previously expected. According to Rabobank, high feed prices will slow expansion of production in many markets due to high working capital requirements.

Disease is still having a big impact on international markets. High pressure from avian influenza has shaken up industries in northeast Asia and Europe, and resulted in production drops in Japan, South Korea, Russia, and the EU. Import restrictions have also impacted export volumes from Europe (chicken and hatching eggs) and Russia (chicken), which is impacting supply in the Middle East and Africa (MEA).

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