The Rabobank Poultry Quarterly report found that the poultry industry faced a “challenging marketplace” last year as the result of rising feed prices and oversupply in regions. It stated that reductions in corn prices in recent months, rising prices for beef and pork and improving supply discipline in key producing countries such as Brazil could lead to an improvement this year, but warned that this outlook was dependent on risks related to feed prices and supply management.
Although feed prices appear to have slowed down, low stock levels and an uncertain production outlook for grains and oilseed mean that uncertainty remains, said the report. It added this would make optimal management of poultry supplies particularly crucial going forward.
Rabobank analyst Nan-Dirk Mulder said: “As grain and soybean stocks remain low, supply discipline will be a key tool for the industry to maintain margins. This has been demonstrated in Brazil, where production cutbacks have paid off in improved margins. Regions with inadequate market balance, such as South Africa and India, need to reconsider production levels in the next few months. This is also the case for producers in the EU, where performance worsened throughout 2012, although Q4 did see some improvement.”
The report identified Russia and Ukraine as the best-performing local industries when it comes to managing supply and maintaining high margins, but pointed out that prices in Russia have seen some decline recently.
The US, the EU, Thailand and South Africa were identified as having the “most challenged” poultry industries, with the US and EU only recently starting to make supply cuts. South Africa is flooded with broiler imports from the EU, while the expansion of Thai production has been too fast to balance with current demand, the report said.
Meanwhile, industries in India and Mexico continue to face difficulties as a result of avian flu outbreaks, although the report noted that outbreaks in Mexico were primarily limited to laying hen farms.
Global trade of poultry on a year-on-year basis fell for the first time since 2008 in Q3 last year, said Rabobank. Overall production declined 4%, with declines of 3%-5% in the major exporting countries Brazil, the EU and the US.