Source: MEATINGPLACE, 2/18/16

Increasing demand and slower supply growth are driving a recovery in global poultry margins, and a free-fall in prices that hurt the industry in the fourth quarter has now stabilized, Rabobank said in its latest quarterly poultry report.

The margin outlook is gradually improving, helped by lower supply growth in the United States, China, Thailand and Europe, and price support from recovering red meat markets, Rabobank said.

Focus on Asia
The biggest factor to watch for is Asian supply, Rabobank said.

Restrictions on breeding stock will reduce production primarily in China, but also in Thailand and Korea, in the second half of this year, said Rabobank animal protein analyst Nan-Dirk Mulder.

“This will have a strong short-term local and global market impact and will lead to local tight market conditions, increased Chinese imports and pressured Thai exports,” Mulder said.

Prices dropped by 20 percent for breast meat, whole birds and processed chicken, and by as much as 50 percent for leg quarters. While prices have stabilized, possible avian influenza outbreaks in key export markets are a wild card, Rabobank said.

Global feed costs are expected to be range-bound at current levels, but big differences exist between regions. India and South Africa are being hit by adverse crop conditions, while Brazil and Russia are feeling the impact of negative foreign exchange translations. In Brazil, this means feed costs are up more than 30 percent from last year, Rabobank said.

For more stories, go to www.meatingplace.com.