Source: Susan Kelly, MEATINGPLACE, 12/26/18


With U.S. broiler markets still weak and prices depressed, poultry integrators are likely to slow production in 2019, a Rabobank analyst said in the bank’s latest Poultry Quarterly report.

Nan-Dirk Mulder, senior analyst for animal protein, predicted the outlook for the global poultry industry will gradually improve, particularly in the second half of the year, due to rising Chinese imports spurred by the impact of African swine fever on protein demand in the country. That demand is expected to lead to more imports particularly from the United States.

But before then, a rebalancing is needed in a market burdened by oversupply from record-high broiler and red meat production that has resulted in low domestic prices and high cold storage levels, Mulder said.

The analyst pointed to record broiler production of 3.89 billion pounds in the month of October that has pushed boneless breast meat prices well below historical lows. Boneless prices are 22 percent below the five-year norm, according to Rabobank. Wing prices are down 23 percent year over year.

Losing money
Most big-bird operations have posted sizable losses in recent weeks, with small-bird operations faring slightly better on production that is down 8 percent year over year, the report said.

“Chicken demand remains weak as large supplies of competing proteins, especially pork, make for a very competitive retail marketplace,” Mulder wrote. “We are beginning to hear of a modest pick-up in retail interest as current prices have piqued buyer interest.”

In the first half of 2019, global markets will remain challenged by U.S.-China trade tensions, changing Saudi trade standards, the removal of some Brazilian exports from the EU approved lit and ongoing disease issues.

“Under such challenging market conditions, a balanced supply strategy can help maintain profitability -- this has already paid off in Brazil, Russia and South Africa, and could be followed by others, such as Thailand and the EU, where the industry suffers from oversupply,” Mulder said.

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