Source: MEATINGPLACE, 12/3/15


Robust poultry demand, continued low feed prices and a price advantage over competing proteins such as pork and beef all make for a positive outlook for the global poultry industry, according to Rabobank’s “Poultry Quarterly Q4 2015” report, released Wednesday.

Despite the bright prospects, though, the report called out avian influenza as a “wild card” that may knock supply and demand out of whack.

“Well-balanced markets will better protect the industry for a potential negative impact of AI outbreaks (like trade restrictions), and they provide the industry with more pricing power to achieve better margins,” according to the report. 
AI’s impact on regional markets
• The avian influenza outbreak caused a sharp drop in industry margins in the United States, and the industry is now reducing supply to rebalance the market. As a result, Rabobank says the outlook for 2016 in the United States in particular is “challenging.”
• Facing record-low chicken prices, China is facing a “challenging” outlook as well, but Rabobank says it may recover in the second half.
• Brazilian producers and processors, on the other hand, are looking at a brighter year ahead with a strong domestic market.

Still, low feed prices and high competitive prices in beef and pork play into the poultry industry’s favor overall.

“Under these conditions, demand for chicken is usually strong, as consumers tend to trade down to cheaper proteins,” according to the report. “After a relatively long bullish market situation, many global markets have entered a period of oversupply at the end of 2015 and this needs to be solved in the next months in order to make the industry profitable again.”

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