In its third quarter report, Rabobank argues that supply is balanced in most regions, beef prices are high and feed costs are low. With China the notable exception, the poultry industry is profitable in almost all the major regions.
Avian influenza still concerningAvian influenza, however, remains a major concern for the global poultry industry, with new outbreaks of the disease in most regions of the world, except Australia and South America. Despite this concern, the number of outbreaks has been dropping, offering the industry in affected regions some time to recover.
“The performance in most regions is currently improving, but the industry should have optimal biosecurity as its first priority, as avian influenza pressure is still significant," the report stated.
Rabobank animal protein analyst Nan-Dirk Mulder said: “Any new case can have a big impact on regional and global and trade streams, as we have seen in the past few months, in which Brazil and Thailand have taken further market share in global poultry trade from the U.S. and China.”
The longer term outlook for the global poultry industry is also thought to be positive, as grain prices are expected to remain low, and global stock supply will be very low in regions with avian influenza-related import restrictions, such as China and South East Asia.
The expectation that China will face shortages in poultry and pork supplies next year could especially become a swing factor for the industry.
Market variationFurther spread of avian influenza to key chicken producing areas in the U.S. over the remainder of 2015 is a wildcard, however, margins there are expected to remain strong despite the trade bans.
Strong market conditions are expected to continue in the European Union. The European market is expected to maintain a healthy balance, with restrictive supply growth.
In Brazil, the weak local economy is leading consumers to trade down in meat purchased, and this is raising poultry meat consumption, while in China forecasts suggest that there will be some improvement in poultry markets due to rising pork prices.
Russia is expected to report an improved performance due not only to higher feed costs but also as a result of price support from high beef and pork supply.