Rabobank’s latest “Poultry Quarterly” relays an optimistic outlook for global poultry markets despite prices coming somewhat under pressure during the first quarter of 2023. The consultancy sites tight supplies in major importing countries brought on by both ongoing supply chain issues and avian influenza. Rabobank notes that the disease, also known as “bird flu,” remains a major wild card.
According to Rabobank, the poultry sectors performance varies widely between regions right now with the US as well as Brazil, India, and Indonesia operating under “difficult conditions.” That includes high feed prices and other costs, such as energy prices.
The good news is that Rabobank sees feed costs coming down with soybean and corn prices expected to drop this year by -5% to -10% compared to Q1 2023 levels. This is mostly based on expectations for strong harvests in Brazil and Eastern Europe, as well as improving forecasts for US production. While this will provide some relief, feed prices will nonetheless remain historically high in most regions.
Meanwhile, energy prices will likely remain volatile and highly influenced by in developments in the ongoing Russia-Ukraine war, as well as increased demand for liquified natural gas as China’s economy normalizes.
Overall, demand for poultry is robust, particularly in developed markets. Rabobank points out that at a time when eggs are reaching record-high prices globally and competing proteins like beef and pork are expected to remain expensive, poultry remains the cheapest animal protein. However, demand erosion is occurring in some markets with sizable populations of low-income consumers though, as high inflation continues to take a toll. This is especially the case in Africa and Asia where consumers are turning to cheaper, traditional plant-based protein sources.
Bird flu is the top wild card for the global poultry trade in 2023. Rabobank notes that the disease continues to spread further into Latin America, getting closer to Brazil’s southern production states, which account for over 60% of the country’s total production. As the end of summer approaches in the Southern Hemisphere, risk of virus spread is expected to increase. Another risk factor in Brazil is the fact that the country offers little in the way of compensation packages for poultry losses due to bird flu. Rabobank says this increases the risk that cases go unreported.
Nan-Dirk Mulder, senior analyst of animal protein at Rabobank, says if bird flu does hit some of Brazil’s big production states, the potential impact on global trade could be big. Major importing countries may choose to change their sourcing, benefiting alternative exporters like the U.S., the EU, Ukraine, Russia, Turkey, Thailand, and China. This would result in higher prices, and for some submarkets, like breast and whole birds, there would be insufficient supply, which could have an additional bullish impact on prices,” explained Mulder. The report is available for download HERE.
