external demand, mainly for China and Saudi Arabia. On the costs side, the price of feed has seen a downward trend since the spring which has helped improve production margins, although higher fuel and electricity prices have somewhat negated this.
Europe Conditions in the European poultry market have continued to improve, with prices for live poultry now 20-25% above fourth quarter 2020 to first quarter 2021 levels. Prices for chicken cuts have not yet kept pace with this price increase, with breast now around 15% above first quarter 2021 levels and legs up by 20%. This illustrates the relatively tight supply situation in the European market, driven by ongoing avian influenza pressure, low profitability due to Covid-19, salmonella in eastern Europe and high input prices, especially for feed. While the UK has suffered labour issues, it has benefited from Brexit, with placements rising by 13% in the first half of the year, while the rest of Europe saw placements during this period 2-3% below pre-Covid levels. The challenges, argues Rabobank, will be for proces- sors to convert higher costs and lower supply into higher sales prices, especially if foodservice sales are hit by future pandemic-induced lockdowns.
Russia For the first time in 15 years, Russian meat supply is set to fall – by 0.6% – with reduced poultry production the main driver – as beef production rises. The key drivers of lower supply are high feed and other input costs, and the combined impacts of African swine fever and AI. But the outlook for the sector is relatively positive with early predictions for the wheat harvest optimistic.
China and the Far East The Covid-19 situation, and in particular China’s zero-toler- ance policy, has impacted consumer demand, particularly in group dining and some food catering channels. The industry is still performing below breakeven and there is pressure to reduce supply in the light of the recovery from ASF of the favoured pork sector. The outlook for the Japanese industry is positive, given tight stocks (lowest stock position since 2015), expectations of low production, ongoing high beef prices and strong local de- mand. This is expected to lead to strong local prices and mar- gins and an eager buying strategy among trading houses in international markets. While in Thailand the situation is set to improve with better market fundamentals in an improving local economy and a better tourism market.
▶ POULTRY WORLD | No. 1, 2022
Operationally, there will be challenges for the poultry industry in 2022, as feed and other input costs are expected to remain high. With feed prices in particular continuing to be high and volatile.
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