Poultry industry confidence declines but remains high

The Poultry Confidence Index declined in the first quarter, but it started from lofty heights and still reflects strong confidence in the industry.

(Courtesy Trouw Nutrition)
(Courtesy Trouw Nutrition)

The Poultry Confidence Index declined in the first quarter of 2020, but it started from lofty heights and still reflects strong confidence in the industry.

A slight decline to open 2020

The PCI now stands at 121 (1996 = 100), down from 141 in the fourth quarter of 2019. The Present Situation Index – based on perceptions of current business and labor market conditions – fell slightly from 151 the previous quarter to 138. The Expectations Index – based on the short-term outlook for income, business & labor market conditions – also declined, to 110 from 133.

Top-line-poultry-industry-confidence-trends,-Q1-2020

First-quarter 2020 PCI confidence dropped 20 points from the fourth quarter of 2019.

The Conference Board’s Consumer Confidence Index has followed a similar trend, with declines from historical highs that remain well-above-average. According to the board, consumers continue to view current conditions quite favorably. When this is coupled with employment growth, this should be enough to continue to support spending and economic growth in the near term.

The biggest hit to the PCI was for future profits, falling from 138 in the fourth quarter of 2019 to 89 first-quarter 2020, below the 100-point ‘average’ (or norm).

Chinese demand

Respondents were concerned that increases now in the broiler, breeder and layer flock would result in oversupply if expected exports to China – now that Chinese authorities have lifted their ban on U.S. poultry to help alleviate their protein deficit caused by the African Swine Fever epidemic in pigs – do not materialize or are less than expected. 

To date, only a limited amount of U.S. poultry has moved into the Chinese market.  The U.S. Department of Agriculture (USDA) expects these exports to gradually ramp up during the second half of 2020.  If this prediction falls short, it will most likely dampen prices and lower profits.

Summary

Confidence in the poultry industry declined during the first quarter of 2020 but remained overall the industry remains highly optimistic. Some are anxious that increased production to meet Chinese demand may harm profits if exports to this country do not materialize or fall short of expectations.

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