Summary

Broiler Meat: Exports are forecast moderately higher. Both the United States and Brazil have ample supplies and market access to satisfy rising imports by Russia, the Middle East and a number of markets in Asia. The strongest import growth is expected in Russia where the United States, its leading supplier, is expected to fill the tariff rate quota.

Beef: Exports are forecast to rise, reversing the trend of recent years. Production expansion by South America and India is expected to more than offset declines in North America and Oceania. However, growth in world trade continues to be constrained by tight supplies and Sanitary/Phytosanitary (SPS) restrictions. Imports in a number of countries are forecast higher as domestic supplies are tight. Also, continued economic recovery is expected to bolster Asian imports.

Pork: Exports are forecast just short of the record set in 2008. More competitive US and Brazilian pork is expected to displace EU shipments, where rising costs of production result in lower exportable supplies. Global demand is expected to be slightly stronger with contracting Canadian production offset by larger imports and improving economic conditions stimulate Asian demand.

BROILER MEAT: 2011 FORECAST OVERVIEW

Production

Production is forecast up two per cent to a record 76.2 million tons and is supported by record levels from all top producing countries. Strong domestic demand and, to a lesser extent, rising exports, will fuel production growth in many countries, as is the absence of major disease outbreaks. However, as 2011 progresses, rising grain prices may adversely impact production.

Production by the world’s leading broiler producer, the United States, is forecast less than two per cent higher at 16.6 million tons, although that rate of growth may be tempered by high feed grain prices. Stronger domestic demand and recovering foreign demand will support expansion. US per-capita consumption continues to rebound, building on the recovery that began in 2010 with tight supplies of red meats, particularly beef, consumers are expected to shift to lower-priced meat products like versatile broiler meat.

China’s production is expected to increase almost four per cent to 13 million tons as strong demand and high prices encourage expansion. However, that expansion may be constrained by high feed costs, particularly corn, which accounts for about 60 per cent of broiler feed. Fewer outbreaks of highly pathogenic avian influenza, more standardized operations and changing structure will improve productivity.

Growth continues at a slower rate

Brazilian production is forecast up on both strong domestic and foreign demand while Mexican production is up on strong domestic demand. Per-capita consumption for both countries is expected to rise, accounting for a larger portion of total meat consumption. Price competitiveness and improved purchasing power will bolster domestic demand. Higher production levels in Mexico will also be fuelled by greater use in processed products, although rising grain prices may slow growth as feed accounts for a major portion of costs.

Government interventions affect industry

Russian production is forecast to continue expanding, although more slowly than in recent years. Rising feed costs are expected to squeeze returns, although the government’s commitment to support long-term production expansion will likely assure continued profits. Large enterprises dominate the industry and government loan subsidies will continue to favour them over small producers.

Production in Argentina is forecast to jump nine per cent as a sharp decline in beef production, generating a shortfall in animal protein supplies, is expected to cause an increase in poultry demand. Thus, rising broiler meat consumption would capture a growing share of total meat consumption. As broiler meat is not subject to the same production and export regulations constraining the cattle sector, production can also expand to benefit investors seeking export-orientated revenue.

EU production is forecast slightly higher as elevated grain prices constrain growth. Rising domestic, rather than foreign, demand will support marginal production gains. The full impact on the industry’s competitiveness due to recently implemented animal welfare regulations, which limit stocking density, is yet to be assessed, but generally expected to adversely affect profits.

Trade

Exports are forecast three per cent higher to a record of nearly nine million tons due a reduction in SPS barriers, as well as economic growth and recovery. Expansion is fuelled by demand from virtually all major and emerging markets, and both the United States and Brazil will benefit as major suppliers.

The United States and Brazil are forecast to account for over 70 per cent of exports by major traders. The combined share of trade by these two exporters is expected to be slightly less than five years ago.

US and Brazil grow at same pace – three per cent

US exports are forecast at 3.0 million tons, reversing the recent downward trend.

• The strongest growth is expected in shipments to Russia as the United States is expected to fill its tariff rate quota allocation set at 446,400 metric tons. Despite strong domestic production, its imports are expected to rise on resolution of SPS issues.
• As its main supplier, the US will also benefit from a forecasted rise in Mexican imports. Raw material demand from the food processing industry is growing as consumption patterns mature due to rising incomes and urbanisation.

Brazil remains the leading exporter, with growth expected at three per cent, relatively on par with the past three years.

• Growth is primarily due to robust demand by Middle East markets as rising incomes and economic expansion stimulate imports by Saudi Arabia, the United Arab Emirates and Iraq.
• Shipments to China are likely to increase but are not expected to fully replace US product displaced by anti-dumping and countervailing duties.
• Emphasis on emerging markets will continue to fuel expansion.

Further Reading

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October 2010