“After a period of slow poultry consumption growth due to a weak global economy and rising prices resulting from cost increases, global demand has room for some recovery. This is driven by lower feed costs and, therefore, lower chicken prices,” said Nan-Dirk Mulder, senior analyst, animal protein, Rabobank. “Poultry should be able to benefit from its relatively competitive pricing in many markets compared to other proteins like beef, pork, and alternative proteins.”
Disease threat
Challenges for the sector, however, include forecast slow global economic growth, and rising market volatility risks due to avian influenza (AI) and El Niño.
AI could suddenly impact global markets, from both a local supply and a trade perspective, especially if Brazil’s southern states are hit, reads the latest Rabobank poultry quarterly.
“As AI is now present in most regions, new outbreaks will occur frequently, which often means temporary restrictions on global trade and shifts in trade flows,” commented Mulder.
Government interventions driven by food security, geopolitics, and sustainability will also continue to impact markets and create volatility in global trade, he predicts.
Cost-control and operational efficiency will be key. Producers should maintain focus on the operational side, remarked the analyst.
“Although we believe feed prices will drop slightly, operational costs are still at historic highs, and risks of further volatility exist in grain prices, due to El Niño, and in energy prices and availability. Ongoing leadership in terms of costs and procurement will remain key.”
Regional focus
Rabobank anticipates improving market conditions in the US, Mexico, Japan, South Africa, Indonesia, and China.
“The EU market has been strong, but high levels of fresh chicken imports are creating pressure. Brazil and Thailand face more challenging conditions and will need more supply growth discipline in oversupplied domestic markets.”
Trade outlook
Global trade is expected to stay strong in 2H 2023 after reaching a record-high 7.2m metric tons in the first half of the year, driven entirely by increased trade of raw poultry meat, while trade in processed poultry meat dropped sharply, noted the analysts.
“Amid more price-driven markets, consumers’ product preferences are changing, and this trend is expected to continue in 2H 2023 and into 2024.”
