Rabobank Poultry 3Q21: improving local industry performance, shifting trade flows

28 July 2021, at 12:30am

The outlook for the global poultry industry continues to improve, driven mainly by the reopening of economies as vaccination levels accelerate in developed countries and increase in emerging markets.

According to RaboResearch Food & Agribusiness team, this will help the recovery of global, regional, and especially foodservice demand, which, on average, makes up one-third of global poultry demand.

As supply usually responds slowly to such increases, significant price inflation in 2H 2021 is possible, especially as feed prices remain high and avian influenza has disrupted global trade of breeding stock.

Global trade flows are shifting, with less focus on China (because of local supply growth) and the Middle East (because of food security ambitions), and more focus toward northeast Asia and Europe.

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Report summary

  • Strong local market conditions are expected in the US, Mexico, Japan, and Russia, while Europe and South Africa are expected to see better conditions due to stronger demand and, in Europe, lower production.
  • Disease is still having a big impact on international markets. High pressure from avian influenza has shaken up industries in northeast Asia and Europe, and resulted in production drops in Japan, South Korea, Russia, and the EU. Import restrictions have also impacted export volumes from Europe (chicken and hatching eggs) and Russia (chicken), which is impacting supply in the Middle East and Africa (MEA).
  • Feed prices are expected to stay high, although slightly lower than previously expected. High feed prices will slow expansion of production in many markets, due to high working capital requirements.
  • Global trade has been highly impacted by Covid-19, with quarterly trade volumes down by 5% to 10%. Improved market conditions in Europe, northeast Asia, and Mexico will help trade flows to recover in these regions. This should offset more difficult trade conditions in China and the MEA region, resulting from local African swine fever recovery and food security ambitions, respectively.