Rabobank Poultry Quarterly: Peaking industry performance
The industry had a relatively strong second quarter in 2017, with significant increases in poultry prices due to improved demand and supply restrictions.
“The industry is currently benefiting from improved market conditions after avian influenza (AI) pressure has reduced significantly, following the northern hemisphere winter months, even though it has not moved away fully,” according to Nan-Dirk Mulder, Senior Analyst - Animal Protein.
“Relatively tight supply in the aftermath of the 1H 2017 perfect storm, caused by AI and the Brazilian ‘weak flesh’ meat scandal, is another positive for the global poultry industry. On the other hand, demand is recovering as AI has faded from the headlines.”
China has recovered quickly after the 1H 2017 AI crisis. Although new cases of human AI cases are still occurring (at a slower pace), demand recovery, together with very tight supply caused by GP import restrictions and environmental regulations, has shifted market conditions and lifted prices.
The Brazilian ‘meat scandal’ has had a big impact on the Brazilian industry. Exports dropped sharply (down 9%) in Q2 2017, but gradually — partly with price concessions — Brazil has regained market share in global trade, with the latest monthly export figures matching last year’s record levels.
Global meat trade has been hit hard (down 5% YOY) by the 1H 2017 perfect storm. The big winners have been Thailand and the US, which gained market share against Brazil, the EU, and China, due to the meat scandal (Brazil) and AI-related trade restrictions (EU and China).
The outlook for the global industry remains strong, with ongoing tight supply expected in most markets, as a result of AI in 1H and its possible return during the northern hemisphere winter.
The possible return of AI will also keep challenging global trade, as could some other issues, such as the China-Brazil anti-dumping investigation. ■