The global poultry industry’s outlook for 2018 is promising on the strength of demand growth, but discipline in supply production will be required in the face of challenges such as the possible return of avian influenza and competition from beef and pork, Rabobank said in a recent report.
“The outlook for the global poultry industry for 2018 is promising”, says Nan-Dirk Mulder, Senior Analyst – Animal Protein at Rabobank. “This promising outlook includes ongoing demand growth in most markets, except China, and low(er) feed prices in 1H 2018, if not longer. But a disciplined supply growth strategy will be needed, especially as uncertainties are rising.”
Top concerns this upcoming year are the possible return of AI during the northern hemisphere’s winter and increasing competition from rising red meat supplies and their softening prices. Global prices for chicken have remained strong, especially for whole chicken and breast meat, but dark meat prices have fallen.
The global poultry industry will face volatility, driven by AI, exchange rate volatility, and changes in poultry traders’ procurement strategies in response to earlier scandals in trade. Meanwhile, new suppliers will continue to enter the market. Given these market conditions, supply discipline will be important, Rabobank says.
On a market-by-market, basis …
The U.S. poultry industry will continue to succeed under favorable market conditions, including improved exports and a predicted record high corn and soybean harvest that will likely push feed prices down.
Over in China, the domestic industry is having a rough go as winter approaches and many wet markets will continue to close. This could negatively affect prices and global trade, so the industry needs to further reduce supply in order to rebalance supply and demand.
The Brazilian industry is recovering from the “weak flesh” meat scandal, and exports have returned to 2016 levels after significant drops in Q2 and Q3. But Brazilian product could still be substituted with that of new suppliers.
The EU poultry industry, meanwhile, is doing pretty well on a good supply/demand balance and constrained growth in northwestern Europe due to environmental regulations that restrict expansion. Eastern Europe — particularly Poland — will keep growing fast, becoming a major trade hub.
Eastern Europe, in fact, is one of the fastest-growing regions in the world. The other is Southeast Asia. The latter will remain very bullish in the next year, with ongoing growth of more than 5 percent in most countries like Indonesia, India, the Philippines, and Thailand, driven by strong local demand and Thailand’s leadership in global trade. However, recent expansion of the industry, at 7 percent, has probably occurred a bit too fast, when taking the current margin pressure into account.