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Cautious optimism in global poultry market

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According to the Rabobank’s Poultry Quarterly Q1 2018 report, the outlook for the global poultry industry next year is “promising, with relatively positive fundamentals”​ but there are uncertainties.

Uncertainties include avian influenza (AI) and competition from other proteins such as pork and beef.

“The outlook for the global poultry industry for 2018 is promising,”​ said Nan-Dirk Mulder, senior analyst – animal protein at Rabobank. “This promising outlook includes ongoing demand growth in most markets, except China, and low(er) feed prices in 1H 2018, if not longer. But a disciplined supply growth strategy will be needed, especially as uncertainties are rising.”

Global prices for chicken have remained strong, especially for whole chicken and breast meat, but dark meat prices have fallen. Competition from red meat is expected to grow next year, due to rising supply and softening prices.

Rabobank predicts that global poultry trade will again be hit by volatility, driven by AI, exchange rate volatility, and changes in traders’ procurement strategies in response to earlier scandals in trade.

New suppliers are also expected to continue to enter the market.

The report also revealed that China’s industry is struggling, with winter rapidly approaching and many wet markets yet to be closed. It believes that this situation could negatively affect prices and global trade. It advises the industry to “further reduce supply in order to rebalance supply and demand”​.

Elsewhere, the Brazilian industry is recovering from the weak flesh meat scandal, and exports have returned to 2016 levels after significant drops in Q2 and Q3. However, the risk of Brazilian imports being substituted by new suppliers remains.

The EU poultry industry is performing relatively well, based on a favourable supply and demand balance in the European, along with constrained growth in north-western Europe due to environmental regulations, which restrict expansion. Eastern Europe—especially Poland— is predicted to keep growing fast and become a major trade hub.

It reports that the fastest-growing global regions are south-east Asia and Eastern Europe. South-east Asia is expected to remain “very bullish”​ in the next year, with ongoing growth of more than 5% in most countries like Indonesia, India, the Philippines, and Thailand, driven by strong local demand and Thailand’s clear leadership when it comes to global trade. However, it said that recent expansion of the industry, at 7%, has probably occurred a bit too fast, when taking the current margin pressure into account.

The US poultry industry is expected to keep performing well, driven by ongoing strong local market conditions and improved exports, combined with a predicted record-high US corn and soybean harvest.

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