Source: MEATINGPLACE, 6/2/16

The faster-than-expected return of U.S. poultry exports to international markets after avian influenza-related trade restrictions is prompting other exporters to defend their share via price concessions, according to a Rabobank report.

Brazil and the European Union are aggressively defending market share, and prices for poultry have been reduced by up to 20 percent, Rabobank said in its Global Poultry Quarterly report.

“This is affecting margins for companies highly exposed to trade, in countries like Brazil, Argentina, Thailand and Japan,” said animal protein analyst Nan-Dirk Mulder. “We believe this situation will continue, with expected supply shortages in Asia and Mexico offsetting some of the negative impacts of price concessions.”

Outside of these trade battles, market conditions are more favorable. “In balanced markets, companies are receiving good margins,” the analyst said.

High feed costs in Brazil will likely cause industry growth in the country to slow from the 3.5 percent rate of recent months, Rabobank said.

Countries where industry margins are positive include Indonesia, India and South Africa. Some relief will come from better seasonal demand, with Asian and Mexican imports seen rising in the coming months, the bank said.

China has made positive margins, thanks to a 20-percent reduction of broiler supplies because of breeding stock trade restrictions. Other markets in Asia are expected to feel the impact in the second half of the year, which could lead to more exports to China and South Korea.

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