The outlook for global poultry markets remains positive with demand for chicken meat remaining strong as 2023 progresses. However, despite a positive global outlook, not all regions are performing equally well, reports Rabobank in its latest Poultry Quarterly, published in late April.
In Mexico, Japan, China, the Philippines and Saudi Arabia, for example, conditions are strong. In contrast, in the U.S., Brazil, India and Indonesia, the industry is operating under more difficult conditions. In some countries, particularly in Africa and Asia, where populations are large and per capita income low, consumer demand is weakening.
Over the course of 2023, producers can expect to see some relief in input costs. Soybean and corn prices, for example, are expected to decline by 5-10%, compared to the first three months of the year. Nevertheless, in most regions, they will remain at historic highs.
Movement in energy prices will depend on how the Russia-Ukraine war develops and on competition for liquified natural gas.
Global trade in poultry meat is forecast to remain strong for the remainder of the year.
Major importing countries are operating under relatively tight conditions, in part due to supply challenges but also as a consequence of avian influenza (AI). Import volumes are forecast to rise, with prices affected by availability in Brazil and the U.S.
AI continues to cloud the outlook. Its spread in Latin America is increasingly threatening Brazil’s production. Should the virus enter major Brazilian poultry producing states, global trade will be significantly impacted and prices will rise.
US
At the time of publication, Rabobank noted that year to date chicken production was 1.5% higher at 5.7 billion pounds, with both slaughter weights and volumes contributing to this increase. Integrator margins remained below breakeven, but this is expected to improve as the year advances, with the second half looking particularly stronger, in part due to shrinking domestic beef supplies.
Over the first quarter, ready-to-cook production is thought to have slowed, but was 1.9% higher year-on-year (YOY). Slowing production growth helped to work through chicken inventories, however they remained 12% higher than a year earlier’s depressed levels. Lower prices have resulted in retailers featuring chicken more frequently and have increasing foodservice interest.
Brazil
Brazilian chicken exports set new volume and value records in January and February this year. Shipments by volume over the first two months reached 781,000 metric tons (MT), an increase of 13%. By value, the increase was even higher, rising by 26% to stand at US$1.6 billion. China and Saudi Arabia were the two main export destinations.
High external demand for Brazilian chicken meat has helped to absorb excess product from the domestic market and improve prices, which had been on a downward trend since the second quarter of 2022.
Prices are expected to trend to recovery over the coming months.
China
White broiler prices in China were strongly up in February, in response to recovery of the consumer market following the lifting of COVID-19 restrictions. Foodservice and institutional consumption, in particular, have seen demand rise.
Live bird prices were 26% higher in February, while prices for day-old chicks (DOCs) have risen at an even higher rate due to tight supply.
While feed prices remain higher than a year ago, they have been falling, improving farmer margins. Slaughterhouse and processor margins, however, remain squeezed.
Farmgate prices are expected to remain strong this year, but more market recovery will be needed before processors can pass on higher costs.
Europe
The European poultry market remains strong, despite a weak start to the year with falling prices in January. The market is quite healthy due to a 4% decrease YOY in chicken production during the last three months of 2022.
Tight supply is ongoing in the region. AI has not only resulted in culling but also limited expansion, and high costs have resulted in small and medium sized producers limiting supply.
During the last quarter of 2022, output in Europe’s largest poultry producer, Poland, rose, but in Germany, France and the Netherlands, a contraction occurred, and this is expected to continue over the first six months of this year.
Tight local supply has resulted in higher import demand, which was 6% higher during Q4 2022.
Europe’s high production costs, tight supply and AI restrictions are making exports more difficult.
Mexico
January’s chicken production was 10% higher than a year earlier, following on from a record year that saw production reach 3.8 million MT.
Over the first quarter of this year, chicken prices rose by 12% YOY, but at retail level, pricing has been far from uniform. Prices for breast meat and leg meat rose by 20% and 27% respectively, while the price of whole birds was 4% lower.
Production growth in Mexico is expected to moderate as the year progresses to better balance supply with demand, and, while imports in January were 28% higher than a year earlier, they too are expected to decline. Local demand is constraining exports.
Thailand
The outlook for Thailand this year is uncertain, despite the local industry performing well last year, Rabobank notes.
Local chicken producers benefitted from the 35% decline in pork production due to African swine fever and bans on pork imports, however, the pork industry is now recovering.
DOC availability has been a challenge for the industry for some time, however, this now looks to be improving.
Total Thai poultry exports for 2022, reached a record 1.1 million MT, an increase of 8% compared with 2021. Processed meat exports were particularly strong, rising by 18% to 650,00 MT.
The industry can expect a positive first six months this year, with markets remaining balanced. However, as more pork becomes available locally, the industry will face increasing competition at home. Export volumes will remain strong, but prices are expected to be lower than last year, while feed prices will remain high.
Should AI enter Brazil, Thailand will be well positioned to benefit.
Japan
The outlook for the Japanese poultry market remains quite favorable, says Rabobank, and the outbreak of AI will result in chicken prices remaining high. This, however, may see consumers switch to pork from expensive chicken.
Chicken has become the meat of choice in Japan, and total meat consumption rose in both 2022 and 2021 following declines in the previous two years.
Pork consumption, however, dropped last year, but some recovery is expected in 2023. Japan’s chicken production hit a seasonal high in the fourth quarter of 2022 but remained below that of Q4 2021. Rather than resulting in higher imports, imports declined over the period. High stocks of pork, along with imports, have made the competitor protein more attractive.
