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High demand, tight production make for bullish poultry market


Despite cost pressures and operational challenges, the global poultry market is bullish with high demand and tight supply, Rabobank said in its Q3 2022 report.


Senior analyst of Animal Protein at Rabobank, Nan-Dirk Mulder suggested the industry’s biggest challenge is operational with high feed and energy prices due to inflation, labor availability and avian influenza (AI).


Gas prices are more than double Q2 2020 levels. Europe has especially been impacted by gas prices because of its strong dependence on Russia for the resource.


Soymeal is also up by 60%. Rabobank expects feed prices to stay high but below their Q2 peaks.


Rabobank noted the significant impact of AI on the global poultry industry. Europe experienced the highest-pressure AI season in history with 53 million birds culled. The highly pathogenic avian influenza hit the United States in February, with 38 million birds culled in the leading months. Japan, the Philippines, Mexico and Russia have also seen outbreaks.


“One consequence of this challenging context is that supply will be tight,” Mulder said. “Midsized and small producers are downscaling in response to higher working capital requirements and risks. New investment projects have been delayed, given the rise in investment costs, with high steel prices, rising interest rates, high logistical costs and a tight labor supply.”


Still, poultry demand remains high as many consumers are choosing to substitute lower-priced chicken for beef products.


“Weaker economic growth and reduced consumer confidence — in part related to Russia’s invasion of Ukraine — will lead to more consumers trading down to chicken,” Mulder added.


Rabobank predicted a 0.5% to 1% increase in production at most for 2022.


With great import demand, countries such as Mexico, Qatar, Egypt and Sri Lanka are lifting import restrictions temporarily. The EU is also lifting import restrictions on Ukrainian products in support of the country during the war.


“The strong global demand for imported chicken is occurring in a very tough trade environment with AI-restrictions, high logistical costs and limited container availability,” Mulder said. “Under these conditions, Brazil and the US come out on top, having seen strong demand in Q1 2022. The EU has lost market share due to its many AI outbreaks and related trade restrictions. Thailand is recovering but remains relatively expensive due to its high local prices.”


Par: Rachael Oatman (05/07/2022)

Source: meatpoultry.com

Photo: tirée de l'article de poultrynews.co.uk: How ‘agflation’ is driving up the cost of chicken

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