The global poultry market faces a ‘perfect storm’ of challenging conditions in the first half of the year, with recovery to follow. The industry should prepare for a tough year by having an extremely disciplined supply strategy.
A mixture of ongoing disruptions caused by COVID-19, high feed prices, soft economic conditions, problems caused by substantial avian influenza outbreaks this winter, and global oversupply means the industry faces huge challenges. That is the key message from Rabobank’s quarterly poultry market report.
The report suggests that COVID-19 will place ongoing pressure on food service and trade, with the consequential slow economic growth leading to more price-driven market conditions. This will come in the context of higher and more volatile feed prices, competitive global poultry trade markets – due China and Vietnam’s recovery from African swine fever outbreaks – and the significant impact of the current wave of avian influenza in parts of the northern hemisphere.
Europe set to be most affected
The European poultry market is set to be most affected, due to ongoing bird flu outbreaks, rising feed costs, and oversupply issues, although there are some early signs of a reduction in supply. China also has big oversupply worries due to a 12% rise in poultry production last year and further growth in 2021, reducing import demand.
Prices are expected to be low as a result. Nan-Dirk Mulder, senior analyst: animal protein at Rabobank, said: “This perfect storm will require a very disciplined supply strategy from the poultry industry. As feed costs will be high, focusing on cost control and procurement will be more important than in recent years.”
Light at the end of the tunnel
There is some light at the end of the tunnel. Stronger control over the spread of COVID-19 in the second half of the year, as mass vaccination takes place, should lead to a gradual recovery of food service markets, which will help global traders. Yet, before recovery takes place, large stock levels need to be unwound. This process will, for example, delay the recovery of the global breast meat market, argues Rabobank. – Poultry World