The outlook for the global poultry industry is gradually improving after challenging conditions in the 2015 fourth quarter, notably significant oversupply, according to a recent report from Rabobank International available here.
The main factors driving recovery are increasing demand, lower supply growth in key regions like the United States, China, Thailand and Europe, and price support from recovering red meat markets. The biggest factor to watch for in 2016 is Asian supply, given that restrictions on breeding stock will reduce production, mostly in China, but also in Thailand and Korea. “This will have a strong short-term local and global market impact and will lead to local tight market conditions, increased Chinese imports, and pressured Thai exports,” said Nan-Kirk Mulder, Rabobank’s animal protein senior analyst.
Global poultry meat trade will remain highly affected by avian influenza, Rabobank said. Prices for the main traded poultry cuts have dropped — by 20 percent for breast meat, whole birds and processed, and up to 50 percent for leg quarters. This free-fall has now stabilized and will gradually recover in 2016, although AI outbreaks in key export markets are a wild card, Rabobank said.
Rabobank’s Animal Protein Outlook 2016 report, which is available here, summarizes important trends in global animal proteins regarding the range of opportunities and risks that the market may face in 2016.
Continuing low feed costs are positive for the poultry sector, helping production growth reach close to average levels. Rabobank predicts that poultry and seafood appear to be best positioned for growth in 2016, partly because of tight beef supplies.
Rabobank sees ongoing consolidation that is helping to create some global animal protein “giants.” In their quest for growth, these companies cover an increasing number of regions and species. Another notable trend is the strengthening and extension of supply chains within the animal protein sector. Most of this activity is a result of processors looking for opportunities to add more value to meat products, although in some cases, supply chain strengthening and extension is a product of processors looking to secure supply.
The trend to strengthen supply chains will help the animal protein sector manage external pressures, including currency market fluctuations, animal health issues, human health considerations of animal protein consumption, consumers sustainability perceptions, and animal welfare issues, Rabobank said.
