The outlook for the global poultry industry is improving in most regions of the world, driven by better market balances, high competitive protein prices and lower grain costs.

According to Dutch analysts Rabobank, the strongest factor is an expected further reduction in grain and oilseed prices, which should relieve some cost pressure for poultry players.

Poultry values should also see some support from ongoing high beef prices – poultry’s main substitute – while pork prices are also expected to remain firm.

“The global industry is benefiting from improved global market conditions, although significant regional differences exist,” explained Rabobank analyst Nan-Dirk Mulder.

“Companies operating in markets with a well-balanced supply/demand situation, such as the USA, are expected to benefit from these positive developments. However, the likes of Russia and South Africa are still suffering from oversupply, driven by structural changes in market conditions”.

The EU is expected to follow its path of margin recovery at farm level.

“The global industry is benefiting from improved global market conditions, although significant regional differences exist.”
Nan-Dirk Mulder, Rabobank analyst

“The EU poultry industry is continuing to benefit from improved market conditions, with slightly declining feed prices and slightly increasing broiler prices,” says the report.

In particular, it points to strong summer demand for chicken as a result of the hot weather, and a recovery in the German market after a number of animal welfare scare stories in 2012. Rabobank also forecasts some additional price support from reductions in pork production later this year, following the EU’s welfare changes.

It does have some concerns about potential weakness in the French market, however, due to the EU Commission’s decision to end export subsidies for chicken.

Rabobank also believes global trade volumes will remain relatively flat for the rest of the year, being negatively influenced by continued economic slowdown in key emerging economies, currency depreciation in Japan and volatile demand in China and Hong Kong.

And, while conditions in the USA are expected to remain positive, the rapid recovery of Mexican domestic production, combined with its decision to allow Brazil access to its markets, will be of some concern to US exporters.

“In this environment, we expect industry consolidation to continue,” commented Mr Mulder. “Many producers are currently in better shape than in recent years and further consolidation could help local industries to better balance local markets.”

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