The outlook for global poultry markets remains optimistic, despite the big impact of the war in Ukraine, Rabobank senior analyst for animal protein Nan-Dirk Mulder said in the recently released Rabobank Poultry Quarterly Q2 2022 report.
“The outlook for the poultry industry has become more challenging, largely due to the significant operational challenges with ongoing COVID-19 uncertainty, the spreading of AI, the ongoing impact of ASF on pork supply, and the sudden increases in operating costs, especially feed, energy, and transport,” the report opened.
“The main challenge for poultry companies in 2022 will be on the operational side, with ongoing bullish feed markets driven by low levels of global grains and oilseed stocks, high fertilizer prices, La Niña’s impact on production in Latin America, especially for soybean prices, and the disruption in trade from the Black Sea region due to the war in Ukraine. On the demand side, we see solid consumption levels, driven especially by the modernization of meat industries in Asia. These relatively tight market conditions and ongoing increases in grain price levels and forecasts are challenging producers.”
Rabobank noted that U.S. exports in Q4 2021 were down slightly due to relatively weak exchange rates compared to some other major exporting countries, such as Brazil, Ukraine, and Turkey, as well as a drop in European exports due to AI-related restrictions. The war in Ukraine is expected to impact consumer purchasing power, especially in emerging markets. When combined with price inflation driven by higher feed and energy costs, poultry demand could be impacted in these markets. The report also noted that the relatively higher prices for red meat in developed markets could drive demand to poultry.
“Besides high feed costs, gas, oil, transport, and construction costs will remain challenging in 2022. Poultry companies should prioritize procurement, feed formulation, and value pricing models to deal with this complex situation, with efficient leadership a key success factor.”
Despite costs, strong foodservice demand and the high cost of competing proteins are expected to support poultry demand in the U.S. in the near term, the report notes.
The report goes on to evaluate the market outlook for Mexico, Brazil, Europe, South Africa, China, Japan, and Thailand.
Rabobank customers can access the full report here.
Rabobank’s RaboResearch Food & Agribusiness Animal Protein Global Sector Team produced the report, which, in addition to Nan-Dirk Mulder, includes Justin Sherrard, Chenjun Pan, Christine McCracken, Wagner Yanaguizawa, Matz Beuchel, Angus Gidley-Baird, Don Close, Eva Gocsik, Genevieve Steven, Gorjan Nikolik, and Novel Sharma.
