Report predicts improved outlook for poultry industry

Poultry firm
Poultry firm

September 7, 2013

Netherlands-based financial services group Rabobank has published a new report on the global poultry industry, forecasting an improved outlook in most of the world, and a continued recovery in Thailand.The report, published by the bank’s Food and Agribusiness Research and Advisory team, says the improving outlook for the poultry industry is driven by better market balances, ongoing high competitive protein prices, and lower grain costs.

The strongest bullish factor is an expected further reduction in grain and oilseed prices, which should relieve some cost pressure for poultry players. Poultry prices will see price support from continuing high beef prices – poultry’s main substitute – while pork prices are also expected to remain high.”The global industry is benefiting from improved global market conditions, although significant regional differences exist,” said Rabobank analyst Nan-Dirk Mulder.”Companies operating in markets with a well-balanced supply/demand situation, such as the United States, are expected to benefit from these positive developments.

However, the likes of Russia and South Africa are still suffering from oversupply, driven by structural changes in market conditions,” he explained.Global trade volumes remain negatively influenced by the continued economic slowdown in key emerging economies, currency depreciation in Japan and volatile demand in China and Hong Kong.As a result, Rabobank believes global trade volume growth will remain relatively flat for the rest of the year.

Consequently, the bank anticipates a temporary shift in trade streams away from Asia and towards the Middle East and Africa.On a regional basis, while conditions in the US are expected to remain positive, the rapid recovery of Mexican domestic production combined with its decision to allow Brazil access to its markets will be of mild concern to US exporters.

The European Union, meanwhile, is expected to follow its current path of margin recovery and will face some additional price support from reductions in pork production later this year.Asian markets such as China and Thailand are expected to continue their recovery, although in the case of China this is dependent on the ability to limit further H7N9 avian-influenza outbreaks.”In this environment, we expect industry consolidation to continue,” said Mulder.”Many producers are currently in better shape than in recent years and further consolidation could help local industries to better balance local markets.

Consolidation could take the form of regional cross-border consolidation, as has proved successful in Europe, or global consolidation, for example, between companies from low-cost grain-surplus countries in the Americas and companies from grain-deficient countries, such as China,” he added.Rabobank Group is a global financial-services leader providing wholesale and retail banking, leasing, real-estate services, and renewable-energy project financing. Courtesy NATION

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