Avian influenza dampens US poultry industry confidence
As the U.S. poultry industry was hit by highly pathogenic avian flu, the Poultry Confidence Index dropped sharply in the second quarter of 2015.
Avian influenza is a "hot" news story. Media reports have streamed out daily about new AI cases, ways to combat the problem and the impact on both the poultry industry and consumers. The U.S. Department of Agriculture (USDA) chief veterinary officer announced he expected the number of cases to decline by the end of July 2015, but much of the financial and production damage has already been done.
The avian influenza crisis has caused significant financial damage to the U.S. poultry industry and has negatively impacted industry confidence.
Poultry Confidence Index declines sharply
After reaching record levels during the first quarter of 2015, this quarter’s Poultry Confidence Index (PCI) showed a marked downturn. Even though the major indices remained near or well above normative levels, the drop from last quarter to this quarter was the second-greatest decline in the 19-year history of the PCI.
The overall Poultry Confidence Index now stands at 120.0 (1996=baseline), down from 171.1 last quarter. The Present Situation fell to 152.6 from 204.7, while the Expectations Index declined to 93.3 from 148.7.
U.S. poultry industry focuses on avian flu
Respondents were generally positive about the current conditions and opportunities, but less so for future conditions and opportunities as these latter two sub-indices dropped below the 100-point normative level.
While some focused on the waning aspects of avian influenza, the majority focused on continued challenges, disease outbreaks and general unrest in the market.
Outlook for future profits is positive
Future profits, however, were not as negatively impacted. Many felt that the reduced production caused by avian influenza could have a positive impact on prices and profitability. This expectation was further supported by a belief that grain prices would stay at current levels or decrease slightly.
Avian influenza played a major role in reducing industry confidence. Although confidence generally remained above normative levels, the impact of avian influenza dampened this enthusiasm. Perceptions of future conditions and opportunities were harmed the most, although a resulting reduction in supply and favorable grain prices supported positive profit expectations.