While competing meat prices (i.e. beef, pork) are increasing, worldwide supply of chicken is relatively tight and provides a strong base for margin improvement, especially as grain prices are expected to see further declines in 2015.

"The global outlook for the poultry industry is bullish for the remainder of 2014," says Rabobank analyst Nan-Dirk Mulder. "We expect strong fundamentals to keep white meat prices high, while dark meat prices may come under some pressure."

Along with Russia, the other big events for 2H is the recently introduced restrictions on global poultry trade by South Africa. The big winners of this will be Brazil, together with the local industries of Russia and South Africa, where margins will rise significantly. Exporters in the US and EU will have to compete to find alternative markets, and whilst this will affect price levels, it should not have a significant impact on local poultry industries, as market fundamentals remain relatively strong.

Regional updates

• United States: Poultry prices continued their seasonal climb in Q2 2014 driven by higher breast meat values, which peaked during the 4 July holiday. Well balanced market conditions with measured supply growth mean we expect chicken production to increase 3% in 2015.
  
  
• Brazil: Exports currently drive a positive outlook, although the domestic poultry market is currently being affected by a relatively weak domestic demand due to a squeeze on consumer spending power.
  
  
• EU: The outlook for the EU market is bullish, with the chicken market continuing to remain relatively strong, driven by high demand and limited supply.
  
  
• China: Poultry markets are showing signs of recovery concern over AI fades and industry initiatives to reduce production capacity take effect. With poultry and pork prices being strongly correlated, a bullish outlook on pork prices will give poultry strong support in the coming months.
  
  
• EMEA and South America: Russian and South African poultry industries are again operating under bullish market conditions, especially in Russia due to the introduction of the import ban. Argentina’s industry has been affected by a downturn, due to weak domestic consumption and general economic slowdown.
  
  
• Rest of Asia: The outlook for the Japanese industry for 2H remains bullish with ongoing low stock levels and limited impulses from the local industry to expand. Elsewhere, a recovery in Thailand’s market is being driven by better Japanese demand and a fragile recovery is underway in India.