Global poultry market buoyant but oversupply could tip the scales

The uptick in poultry consumption is due to lower production costs and solid demand recovery, according to the latest animal protein report from RaboResearch.

“Poultry’s strong price position against other proteins in most markets, along with strong retail demand, recovering foodservice demand, and rising sustainability strategies that support chicken demand are supporting rapid growth,”​ commented Nan-Dirk Mulder, senior analyst for animal protein at RaboResearch.

While the global picture for poultry industries have remained relatively profitable, China and Japan continue to suffer from local oversupply. Fast production growth, in combination with more challenging local economic conditions and lower consumer confidence has been the main driver, with relatively low prices and rising stocks. This has also weighed on imports, with large year-on-year drops in raw chicken imports to China and Japan in the first half of 2024.

The European industry is performing well, as a result of robust demand and slight declines in feed prices.

Breast meat prices have held fast, with Poland – Europe’s biggest chicken producing and exporting country - seeing prices 11% higher in August than the previous year.

While chicken and leg prices were also higher than last year, up 5% and 2% respectively. Meanwhile chicken wings saw a slight fall, down 1%.

Bearishness in the corn and soybean markets have driven prices for feed down, with Poland seeing a 9% year-on-year fall.

Production in Europe is expected to rise 3-4% year-on-year, as demand is fuelled by its smaller environmental footprint compared to beef and pork.

Total imports were up 3% in the first half of 2024 – mainly due to recovering imports from the UK. However, imports from key suppliers (Brazil, Ukraine and Thailand) were down by 4% year-on-year.

The overall global outlook is shaping up to look good on the whole, however. Global trade is forecast to grow in line with rising global poultry demand but in the context of ongoing volatility.

Weakening demand for chicken feet in China will put pressure on prices, but breast meat and processed chicken prices are expected to remain steadfast in line with strong market conditions in Europe and Asia.

The outlook for European poultry remains strong, with the main challenge lying in keeping markets balanced in a bullish environment.

Tensions in the Middle East and the consequent rerouting of trade via South Africa, will continue to weigh on trade between Asia and Europe due to the longer transport times and higher costs.

RaboResearch’s report has also suggested that the roll out of EUDR will see soymeal prices rise between 5% and 10%.

Avian influenza remains a challenge for the industry too, but on average, the pressure is easing. This year, the EU had the lowest number of outbreaks since July 2019, and South Africa has remained free from outbreaks in commercial farming, with chicken production fully recovering (although egg production is still heavily impacted).

The US is among the exceptions, with ongoing outbreaks during summer months significantly impacting the egg industry. As winter advances in the Northern Hemisphere, RaboResearch warns risks will spike again.

“In a context with ongoing high risks, such as animal disease, feed price volatility, and geopolitical tension, supply growth discipline is important to keep operating under balanced market conditions,” ​cautioned Mulder.

“Otherwise, the current bullish market conditions could push producers to expand too optimistically, leading to oversupply like that seen in China and Japan.”​

In other news, the average shopping basket in Britain is getting less calorific. Read more here...​​