The Chinese poultry industry, hampered by COVID-19 restrictions is beginning to recover from a period of operating a just above breaking even, according to the Rabobank Poultry Quarterly report, released this week.
White broiler prices have steadily increased since the middle of the second quarter of 2022, and that momentum is expected to continue throughout the second half of the year, provided that restrictions related to the COVID-19 pandemic continue to ease, the report stated.
The industry has also been held back by higher soybean prices, which are up as much as 20% on a year-over-year basis. There has also been a lack of available truck drivers, and at least some of that shortage has been attributed to the COVID-19 pandemic.
The report also highlighted that overall poultry consumption is lower than normal because of the pandemic, with weak foodservice and institutional purchases, but a strong growth in retail demand.
Poultry imports to China declined 10% but exports were up 27%. Rabobank projects that imports in the second half of the year will be supported by rising local prices, but they face uncertainty about policy changes related to the highly pathogenic avian influenza (HPAI) situation in the United States.
The rise in exports is an example of how Chinese poultry exports benefit from a tight supply in the global poultry market. In April alone, Chinese poultry exports were up 35% when compared to April 2021.
Impact of stricter farm inspections
Many regional governments in China have strengthened inspections at livestock and poultry farms in terms of environmental issues like wastewater management, as the country is placing more emphasis on environmental and sustainability efforts. As a result of this, a number of farms could be either closed or relocated, the Rabobank report stated. Continued environmental-related industry challenges are expected to endure for the long term.