Price levels will be supported by high beef prices, although higher input costs might reduce margins due to poor weather in South America, requiring an ongoing supply discipline. Total trade is expected to grow 4% over the year 2012, despite lower trade in the first quarter, Rabobank added.
The bank sees a major swing factor in the return of Thailand as a raw poultry exporter, as the EU will lift its ban on raw Thai chicken from 1 July 2012. “This [will] lead to intensified competition in export markets, with the potential for price erosion and pressure on export volumes for existing exporters,” the report said.
In the meantime, Brazil could benefit from a weaker real, following months of strong currency that made it less competitive, and the US could recover its margins after several quarters of supply and inventory reduction. The EU will continue to benefit from strong export demand and a solid local market.
The Chinese poultry market is going through changes as the focus is shifting towards more retail and quick-service restaurants, which is pushing the Asian industry to invest in large expansion projects. “The current weak Chinese market conditions are expected to improve towards the end of the year, due to solid domestic demand in combination with improvements in the market situation for pork due to stock liquidations,” Rabobank added.
Overall, the report forecasts ongoing consolidation in the global meat industry, with emerging countries dominating the market.
“The industry should see continued strong global demand for poultry – world demand is expected to grow 2% in 2012 – as well as strong prices of competing meats, such as beef and pork, in most global markets. Support will come from record high beef prices in particular, due to a very tight global beef market,” the report said.
Rabobank added that supply discipline was showing good results, with a 13% reduction in US inventories, and Brazil currently reducing supply to adjust the market after lower-than-expected export growth.