Source: Tom Johnston, MEATINGPLACE, 5/29/15


Global poultry prices will remain under pressure for the remainder of 2015 due to avian influenza and related trade bans could cause significant long-term impacts on the market, Rabobank said in a new report stressing the need for a global approach to managing AI.

“Poultry industry fundamentals are facing meaningful headwinds with stronger than expected feed prices due to a strong U.S. dollar, increased competition from falling pork prices and restrictions on trade,” says Rabobank animal protein analyst Nan-Dirk Mulder. “Prices for whole chicken, leg quarters and chicken feet are declining further, while breast meat prices remain relatively strong.”

As proven by countries with healthy market balances and margins, including the U.S., supply growth discipline will be important under such worsening conditions, Rabobank cautions.

The firm believes that global approaches to deal with avian flu will require strict biosecurity standards and adjusted industry business models. Meanwhile, governments should follow international guidelines regarding avian flu-based trade restrictions. Many countries in Asia, including China, who have implemented restrictions on trade on breeding stock might be affected by low supply next year due to expected future shortages in local breeding value chains.

A regional outlook for poultry is as follows:
• EU: Slight margin recovery, improved trade position due to weak euro and possible lifting of avian flu related trade restrictions
• U.S.: Wave of HPAI outbreaks, but broiler sector less impacted and argins still strong on robust local market demand
• Brazil: Competitive position in global trade with weak real and avian flu bans for competitors
• Russia: Less bullish market, with ongoing higher feed costs and removal wheat export tax
• China: Fewer avian flu cases, but still big impact — margins to lowest level in five years
• Thailand: Oversupply despite strong exports
• South Africa: Improved margins, but outlook more clouded on likely return of EU exporters

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