The research team is bullish about global poultry prices - a trend they say is driven by relative price support from high beef and pork prices alongside demand recovery and a more balanced supply and demand situation in most regions of the world.
“This is expected to lead to an improvement in profitability for the global poultry industry. Under improved global market conditions, led by the North American region, a slight increase in global chicken prices is expected,” said Rabobank analyst Nan-Dirk Mulder.
However, markets remain volatile and any change on the supply and feed side will impact global prices. “Suppliers should look to keep production growth disciplined,” he said.
The analysts say the possible return of volatility in feed prices can't be ruled out. Higher feed input costs would leave the poultry industries in all regions vulnerable as stock levels remain low.
“Global grains and oilseeds prices have recently increased and old crop grain markets are currently tighter than expected.
In addition, ongoing concerns about the situation in Ukraine and the potential threat of an El Niño event are creating some market volatility. Animal disease outbreaks also remain a concern,” said the Rabobank poultry specialists.
Regional outlook
The poultry outlook for the US in 2014 is on pace to be even better than 2013 - one of the most profitable years in the last decade, say the researchers.
The industry there is primed to benefit from lower beef and pork production, a limited breeder flock, increasing exports due to the risk of another avian influenza (AI) outbreak in Mexico, and favourable feed costs, reports the Dutch research team.
“Margins in the EU poultry industry are currently quite strong. Markets are reasonably well balanced, with a reduction in production in Q1 compared to the same period in 2014 and relatively strong demand,” notes the poultry review.
In terms of the Chinese poultry sector this year, AI outbreaks decreased, coinciding with warmer weather in Q2 2014. "The negative impact on consumption is fading and the market is now showing signs of recovery, with increasing poultry prices in both retail and live bird prices," notes the report.
The analysts predict Brazilian poultry meat prices will hold firm in Q2 as a consequence of the high prices of competing proteins as well as the increases in both domestic and international demand.
Production in Mexico has been unable to recover from its 2013 contraction and could experience further setbacks as a result of the return of AI, said the authors. Domestic issues saw production in Argentina fall 4% YOY in Q1 2014, they added.
The Russian poultry industry is still suffering from oversupply in the domestic market, while market conditions in the South African poultry industry have normalized after a long period of oversupply with rising imports, shows the review.
“The Japanese and Thai poultry industries remain bullish although the gradual restart of a major Thai broiler producer might impact future outlook. In contrast, India's poultry industry experienced one of the worst first quarters in the last five years,” said the analysts.