Thursday, September 21, 2023

Rabobank: poultry 4Q challenges of balancing markets

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UTRECHT, Netherlands — Moving through the fourth quarter of 2020 and into 2021, the global poultry industry will operate in a volatile market context, with ongoing pressure coming from foodservice and wholesale markets, analysts with Rabobank note in a recent report. Possible new waves of COVID-19 will add to the market ups and downs, and the impact of a deep economic crisis will make markets more price-driven.

“Over the whole year, we can expect to see a slight increase in global poultry production (+0.8 percent year-over-year). This is the result of poultry expansion in China and Vietnam — where African swine fever (ASF) has reduced pork availability — and also from expansion in the U.S. The rest of the world will be operating in an environment of shrinking production. There is a global shift from foodservice to retail, benefiting retail-focused companies,” Rabobank says, adding that global trade is very competitive and volatile, with most import markets reducing volumes.

“Trade into ASF-affected markets like China, the Philippines, and Vietnam has become more important, and this raises risks as local production recovers. Exporters like Brazil, the U.S., and Russia are focused on China, with export volumes expanding quickly, but with price concessions,” said to Nan-Dirk Mulder, senior analyst–animal protein at Rabobank. “Prices are highly pressured for all cuts, especially breast meat, legs and feet.”

“Balancing local supply with volatile demand will be the big challenge for global producers, and the experience so far this year shows how difficult this is,” says Mulder. “Differences in expected poultry production growth are bigger than ever, ranging from 15 percent growth in China to 5 percent in Vietnam, contrasting with -8 percent in Thailand and more than -10 percent in India.”

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