STRATEGY ▶▶▶
Markets bullish but supply still set to be challenging
The improving economic conditions seen at the end of last year are set to continue as Covid-19 vaccination levels rise and markets recover but the journey forward will be bumpy. These are the conclusions of Poultry Outlook 2022, published by agricultural banker Rabobank.
BY TONY MCDOUGAL A
s the new Omicron variant of Covid-19 is showing, there will be ups and downs in parallel with coro- navirus developments and the industry will need to be ready to adjust sales channels in response to
measures taken in nations across the globe. Operationally, there will also be challenges for the industry, as feed and oth- er input costs, such as energy and freight, are expected to re- main high. Feed prices in particular are expected to continue to be high and volatile, with Rabobank in its 2022 Outlook, expecting a 5% increase in feed commodity costs in the first half of the year. Prices for corn and soybeans are expected to peak in the third quarter.
Inflation Nan-Dirk Mulder, senior analyst Animal Protein, notes: “In 2022 it is highly unlikely that food prices will return to their five year averages, as commodity prices are now supported by inflation in the general economy, low global stock levels, and labour shortages in many countries. These high input prices will push producers to focus on yields, procurement and efficiency in the value chain to reduce feed and labour use”. For some countries, such as the UK, which has been hit by substantial labour issues due to Brexit, employee availabil- ity will continue to pose problems which may, in turn, restrict production in some markets. There will also be a slowdown in new greenfield site invest- ment due to higher steel costs, larger wage bills and worries
10 ▶ POULTRY WORLD | No. 1, 2022
about higher interest rates. But despite these issues, Rabobank says the combination of stronger demand and supply challenges will create an environment of stronger prices which will push producers to focus on yields, procure- ment and efficiency in the value chain to reduce feed and la- bour use. It will also lead to new food security efforts to re- duce inflation and keep poultry affordable, particularly in emerging markets.
United States Global poultry growth is set to reach 2%, marking a rise of 0.5% on earlier forecasts, with the United States in particu- lar seeing strong profitability on the back of a 2.4% rise in production. There will be a modest expansion in the breed- ing flock, some improvement in hatchability and gradual stabilisation and growth in weekly chick placements com- pared to 2021. Growth is partly due to good retail support for chicken as a value item in the last quarter of the year and strong foodservice sales which are driving the increase in consumption. Export sales also remain robust with year- to-date volumes up 1% year on year but export value 25% higher than a year ago. While volumes to China are expect- ed to remain low, those to Mexico, Cuba and the Philippines will continue to be strong.
Mexico and Brazil Chicken prices in Mexico are rebounding, up 43% on their lows, but expectations for the next 12 months are limited. Tourism has yet to recover due to the pandemic and, in re- sponse to sluggish demand projections and higher corn prices (up 35% year on year), the industry is expected to slow production and shift to smaller, whole birds. Producers are operating just above breakdown levels and so need to remain disciplined. Analysts believe the situation in Brazil will improve, based on stronger export demand and bullish global markets. But the beginning of the year may be challenging for the production sector, with a seasonal reduction expected in
PHOTO: LEX SALVERDA
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36
