Hooray for poultry markets returning to normal!

Poultry markets around the world are rebounding, but trade is becoming more difficult.

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While normal can be seen as rather boring, returning to normal can be more than welcome if you’ve been through a particularly difficult time.

According to Rabobank’s Global Poultry Quarterly Q3 2024, more normal conditions are what much of the poultry industry is entering, thanks to a combination of rising poultry meat consumption and greater discipline in supply growth.

Approaching historic levels

The bank forecasts that consumption should grow by 1.5-2% this year, close to historic levels, after four years of disruption. However, not everything will be easy for poultry producers, and it cautions that trade will become more competitive due to altered trade flows, and that feed prices are on the rise.

Staying with the positives, higher beef and pork prices are helping to make chicken meat more competitive and more attractive for consumers. Beef and pork prices have risen by 4% and 5%, respectively, but chicken prices are up by only 2%.  That chicken continues to be the most economical choice is not the only reason to be cheerful, demand for processed product has also been rising in some regions.

That consumers want more and higher value poultry meat bodes well producers, but demand, of course, is not the whole story. Rabobank points out that after two years of falling feed prices, the cost of feed is once again rising. This, it says, is due to weaker than expected harvest predictions for the Americas and Europe, and the industry will need to focus on careful procurement and feed formulation to remain competitive.

Global growth is being driven by strong local conditions and not trade. So far this year, emerging markets in Southeast Asia and Asia have been performing well, and the same can be said for the E.U. and U.S., where there is relatively strong demand, production is controlled, and prices are rising.

There are, however, exceptions, and most noteworthy are China and Japan, where the industry has expanded by over 3% this year, impacting profitability. Where China is concerned, producers are now addressing this over expansion, which should help to restore balance, while in Japan, high inflation is expected to keep demand subdued.

Brazil has also been heading towards oversupply, but recent production cuts are expected to restore balance as the year progresses, however, as avian risks return to the Southern Hemisphere the country will need to remain on high alert.

Trade ebbs and flows

Global trade in poultry meat does not have such a positive tale to tell this year. Over the first three months, it contracted by 5%, compared to the first quarter of 2023.

A significant contributor to this change has been China, which contributed 40% less poultry meat during the first quarter. The country’s continued lower import volumes will continue to impact trade this year, forcing its suppliers to look elsewhere to sell their chicken, and increasing competition for other import markets.

This will particularly affect Brazil, the U.S. and Russia. Ukraine is also increasingly looking for new markets for its whole birds and breast meat, following a new, 20% lower, import quota from the E.U.

In contrast, those exporters with less of a focus China, for example the E.U. and Thailand, have seen relatively strong export demand, and China itself continues to perform well in export markets.

Improved market conditions are resulting in more regions producing at above breakeven. The E.U., South Africa, Russia, Mexico and Colombia may have been performing well for some time, but this year has seen significant market improvements for the U.S., Brazil, Thailand, Indonesia, the Philippines, and India.

Perhaps indicative of better, or more normal times head is the increase in demand for processed poultry. Global economic growth, while still forecast to be low, is, nevertheless, recovering, boosting consumer confidence. When consumers are more confident, they spend more freely, and since the last quarter of last year, the market for processed poultry has been on the up, particularly from Europe and Singapore.

A return to normal sounds far from boring, it all sounds rather encouraging.

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