In its latest analysis of the global poultry meat market, Rabobank describes the prospects for the sector in the fourth quarter of this year as “bullish.” However, it warns that over-optimism about the situation could lead to excessive growth, and market imbalances in future.
Following two years of low growth in poultry meat consumption — just 0.6% in 2022 and 1.1% in 2023 — the analysts are forecasting expansion of between 2.5% and 3.0% for 2024. This would represent a return to historic growth levels achieved prior to the COVID pandemic.
Driving the forecast growth are two main factors, according to the report, namely lower feed prices and the relatively high costs of competing meats. As a result, chicken prices are competitive, and so retail sales are strong, fast-food demand is recovering. Furthermore, poultry has a lower environmental impact than most other animal proteins, and so is gaining in popularity in markets where sustainability is growing public concern.
Despite these positive signals, the Rabobank report warns of the presence of some factors that represent a high risk in world markets. For poultry, these include the approaching season of highly pathogenic avian influenza (HPAI; in the Northern Hemisphere), geopolitical tensions, and the ever-present threat of feed price volatility.
In terms of chicken meat trade, prices remained strong during the third quarter of 2024, according to the report. The volume of raw meat traded during the previous three-month period was up 5% year-on-year, despite a 30% reduction in imports by China. Brazil has picked up much of the additional trade to other markets.
Brazil set for new chicken production record
Despite self-imposed export restrictions from the state of Rio Grande do Sul following confirmation of an outbreak of Newcastle disease in mid-July, Brazil expanded its shipments of chicken meat during the second quarter of 2024.
Earlier this year, severe flooding in the same state disrupted the supply of day-old chicks. The effects were still being felt, with higher prices for both chicks and live chickens.
Looking ahead for the rest of this year, Rabobank is forecasting a new production record for Brazil in 2024. This could amount to a year-on-year increase of between 1.5% and 2.5%, driven in part by falling feed prices.
Risks ahead for European poultry market
Bullish market conditions are ruling the poultry meat market in Europe, according to the Rabobank report. As breast meat prices peaked there, feed prices declined.
However, for European Union (EU) member states, the analysts warn of uncertainty ahead in the form of the European Union Deforestation Regulation (EUDR). Coming into effect on December 30, 2024, EUDR introduces new rules that will guarantee products consumed by citizens of the bloc do not contribute to deforestation or to forest degradation worldwide. Furthermore, it is expected to reduce both greenhouse gas emissions and biodiversity loss.
Further uncertainty is on the horizon for the region’s poultry sector as the peak season approaches for the risk of HPAI outbreaks.
Despite these challenges, Rabobank described the outlook for the sector as “strong” for the rest of 2024.
South Africa: threat of overproduction
With a peak in the third quarter of 2023, South African producers were hit by a series of HPAI outbreaks. Production levels have since rebounded, according to Rabobank.
However, it warns that growth in domestic demand is price-sensitive, and imported products are generally cheaper than domestic chicken meat. Furthermore, feed costs may rise as a result of poor domestic harvests of corn and soy, and there is a risk of the return of HPAI.
Overall, the analysts describe the prospects for the South African poultry industry as “moderately positive.”
Mixed prospects for Asia
Poultry producers in South and Southeast Asia — India, Indonesia, Malaysia, the Philippines, Saudi Arabia, and Thailand — have generally continued to maintain profitability, according to Rabobank.
For Thailand, the outlook continues to be strong, as chicken demand is supported the recovery of tourism, growing domestic purchasing power, and higher exports of processed chicken. Official forecasts point to production expansion of 2%-3% this year.
There are different trends in play in China and Japan, where recent expansion in domestic chicken production have led to oversupply in their domestic markets. Rabobank puts the latest year-on-year expansion figures at around 7% and 3% in China and Japan, respectively. Combined with low consumer confidence and more challenging economic conditions, this has led to lower prices and expanding stocks.
Despite the situation, China is seeing heavy investment in white bird and egg production facilities, according to the analysts, likely related to forecasts of pork prices remaining high for the rest of 2024.
With purchasing power remaining weak, many Japanese consumers have switched to chicken from more expensive meats. This trend is expected to continue until the end of the year, but Rabobank warns that any upcoming spells of warm weather could reduce poultry meat purchases, and add still more to the nation's stocks.
