NEW YORK — Rabobank has published a new report on the global poultry industry, examining how avian influenza is challenging international trade, and stressing the need for a global approach to managing AI, particularly in biosecurity and adjusted business models.
Rabobank says that global trade streams and prices are expected to remain under pressure for the remainder of 2015, that the long-term impact may be significant due to several trade bans on breeding stock in importing countries.
The bank predicts that producers in countries with balanced markets are continuing to enjoy healthy margins, and stresses that global approaches to deal with avian flu are more important than ever.
Rabobank expects prices to remain under further pressure in the next months.
“Poultry industry fundamentals are facing meaningful headwinds with stronger than expected feed prices due to a strong U.S. dollar, increased competition from falling pork prices and restrictions on trade,” said Rabobank animal protein analyst Nan-Dirk Mulder. “Prices for whole chicken, leg quarters and chicken feet are declining further, while breast meat prices remain relatively strong.”
Supply growth discipline is important under such worsening conditions. This has been proven by countries with healthy market balances in their markets like U.S., Brazil, South Africa and Japan where the industry is still making good margins.
Rabobank believes that global approaches to deal with avian flu are more important than ever, with strict biosecurity standards and adjusted industry business models to deal with the new market reality.
Governments should follow international guidelines regarding avian flu-based trade restrictions. Many countries in Asia, including China, who have implemented restrictions on trade on breeding stock, might be affected by low supply next year due to expected future shortages in local breeding value chains.
- United States — Wave of HPAI outbreaks, but broiler sector less impacted. Margins still strong on robust local market demand.
- European Union — Slight margin recovery. Improved trade position due to weak euro and possible lifting of avian flu related trade restrictions.
- Brazil — Competitive position in global trade. Weak real and avian flu bans for competitors.
- Russia — Less bullish market, with ongoing higher feed costs and removal wheat export tax.
- China — Fewer avian flu cases, but still big impact. Margins to lowest level in five years.
- Thailand — Oversupply despite strong exports
- South Africa — Improved margins, but outlook more clouded on likely return or EU exporters.
Rabobank is one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries. Rabobank’s Food & Agribusiness Research and Advisory team is comprised of more than 80 analysts around the world who provide analysis, insight and counsel to Rabobank clients about trends, issues and developments in all sectors of agriculture. More information can be obtained at www.rabobank.com.