04 Oct 2021

Global Poultry Markets Recover on Improved Fundamentals, but Southeast Asia Struggles

Global Poultry Markets Recover on Improved Fundamentals, but Southeast Asia Struggles

Global poultry markets have undergone significant enhancement in Q2 and Q3 2021, with most regions now moving into profitable market conditions. They are benefiting from increased demand, as economies reopen in most areas, as well as from restricted supply. This is particularly the case for countries in the Americas, where industry cost-effectiveness has upgraded. Now, the big exception is Southeast Asia, where the Delta strain is challenging local circumstances. The global position for Q4 2021 is relatively optimistic, with ongoing strong demand and limited supply, relatively flat (but high) feed prices, and further increases in trade volumes driven by improving foodservice. Nevertheless, in some countries, this has created food inflation worries. The wild card for the outlook remains Covid-19. Depending on how it advances, Covid-19 could transform markets and supply discipline in some more fragile spaces, like Europe and Southeast Asia.

All key areas suffer from stronger local market conditions, except Southeast Asia, due to reopening economies and relatively restrictive local supply. The US, Mexico, Russia and Kapan face particularly strong markets with good cost-effectiveness for local producers.

Supply growth in 2H 2021 will be restricted in many areas by labour availability issues, which are especially affecting production in the US, the UK, and Thailand. Furthermore, ongoing avian influenza (AI) risks and high feed prices are impacting supply globally.

Feed prices are expected to stay quite flat, with some increase in wheat prices due to weaker obtainability from the EU and Russia. Soymeal prices have been falling due to rationing of demand and a more oil-focused approach among crushers.

Global trade showed a strong recovery in Q2 2021, with trade volumes at historical highs. Brazil and the US have benefited the most from strong trade, while exports from Europe, Russia and Ukraine have fallen due to AI and a go-slow in Chinese imports.

 

Perpective for 2021: Further market enhancement with healthy supply/demand conditions

US: strong profitability

  • Limited supply growth due to labour and productivity issues
  • Strong demand in local and international markets
  • High prices and profitability

Europe: Improved 1H markets but fragile outlook

  • UK: Labour issues challenge supply
  • EU production is recovering after 1H drop
  • Well-balanced supply growth will be key for 2H

Brazil: Strong local markets

  • Strong local demand with financial aid
  • Export volumes up 6%, production up 7% in Q2
  • Ongoing high feed costs offset the price rally in Q2

China: Breakeven, but oversupply concerns

  • Broiler industry benefits from wet market restrictions
  • Live broiler prices up 10% despite falling pork prices
  • Foodservice weak, wings and feet import down 30%



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