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Poultry outlook is bullish based on strong demand
Poultry demand for the second half of the year is expected to be strong, as countries continue moves to adopt a ‘living with Covid’ strategy. And with global pressures on spending power and high food prices caused by the Ukraine War, consumers are likely to move to the lowest priced meat protein: poultry.
BY TONY MCDOUGAL T
he key message from Rabobank’s global poultry third quarter report is indeed bullish, although it did note that challenges remain for producers as they face ongoing higher feed and energy prices
into next year. This – coupled with anticipated issues around avian influenza this winter – means that supply may be tight. Europe has had its highest pressure AI season in history with 53 million birds culled, mainly in the layer and duck sectors. H5 strains seem to have become more endemic, in both Europe and Asia. Rabobank said medium and small producers are downscal- ing in response to higher working capital requirements and risks, and that new investment projects have been delayed due to higher steel prices, rising interest rates, higher logisti- cal costs and tighter labour supply. Genetics supply has also tightened following Covid-19, particularly affecting Asian markets, while African Swine Fever has also had a major impact on local meat supplies, especially in Thailand and the Philippines. Margins, however, will remain positive with global demand growing by up to 1% this year – lower than the normal 2.5% – and this could lead to food security challenges in lower income countries. The bank said the difference between win- ners and losers could be significant and that it was important for companies to have strong market power, biosecurity and efficient operations. Traders who have had a tough time dur- ing the pandemic are likely to benefit as global trade volumes rise, particularly those who don’t face AI issues. These include Brazil, the US, Thailand and other smaller countries, such as Argentina, Chile and Turkey.
10 ▶ POULTRY WORLD | No. 6, 2022
Country focus Looking at individual nations, Rabobank notes that the US has seen prices reach new highs on strong demand in both the retail and foodservice sectors amid limited supply. Prices for both boneless breast and leg quarters had risen sharply in the early summer as consumers looked to purchase less expensive protein options and export demand remained steady to strong, with shipments to China up 42% year-on- year (YoY), and Taiwan and Canada also seeing rises of 34% and 12%, respectively. Strong consumer demand for lower value protein options should boost dark meat sales but con- sumer inflationary pressure could limit boneless breast meat in the coming months. US broiler supply growth remains in line with earlier predictions of a 1.7% YoY growth, although supplies remain somewhat constrained by hatchability challenges and higher mortality levels. In Mexico, the government’s announcement in May to reduce food costs could weaken chicken prices, with Brazil and Chile exports likely to be the main beneficiaries as restrictive tar- iffs are removed, although rising shipping costs could limit these volumes. Brazil exports remain strong with increased volumes going to the Netherlands, Mexico, the UK, South Korea and the Philippines, due in part to the proliferation of
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