Rabobank: Consumption growth fuels global poultry market amid oversupply challenges

16 Sep 2024 --- The outlook for the global poultry market has improved significantly after multiple years of slow growth, with increased consumption in key markets driving the sector, according to the latest research by Rabobank. 

The new animal protein report by RaboResearch predicts that poultry consumption worldwide is expected to reach 2.5% to 3% this year in a “historic” return. Reduced production costs and a strong demand in most markets push the recovery.

Nan-Dirk Mulder, senior analyst for Animal Protein at RaboResearch, says: “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.”

Global trade solid despite challenges

Most poultry industries worldwide have recorded rising prices and profitability, with China and Japan being exceptions. Both countries grapple with a domestic oversupply led by increased production and difficult local economic conditions.

The report says these factors have contributed to a lowered consumer confidence, with stocks piling up as prices remain low. The oversupply has also impacted imports, with significant year-on-year dips in fresh chicken imports to China and Japan in the first half of 2024.

Despite hiccups, trade is expected to stay stable in the upcoming months, with most international markets “strong and balanced.” The overall demand for chicken exports is also predicted to increase. However, low demand in China is expected to hit chicken feet prices, but breast meat and processed goods are expected to tide the sector over owing to a strong import market in Europe and Asia.

Developed economies like Europe, the US and Japan will continue following long-term trends and show better affordability. The report expects the demand for processed chicken, concept poultry and other value-added products to recover more, marking a return to trend levels after limited growth.

Geopolitical conflicts, such as those in the Middle East and the rerouting of trade from South Africa, will continue to affect business between Asia and Europe as logistics become expensive and transport slower.

The US is dealing with ongoing influenza outbreaks, which have substantially impacted egg production.“For the outlook, the main wild cards will be animal diseases and geopolitical tensions. Both can suddenly impact global trade flows,” explains Mulder.

Avian influenza remains a concern

Bird flu remains a challenge for the poultry industry, but the risk is lower on average compared to last year. The report notes that the EU has had the lowest number of outbreaks this year since July 2019, while South Africa has remained free of the disease in commercial farming, leading to a full recovery for chicken production even as eggs remain affected.

However, the US is dealing with ongoing summer outbreaks, which have substantially impacted egg production.

The report comes as the outbreak of the contagious Newcastle disease in Brazil culminated in an export embargo to several destinations in July this year. Countries like Japan, China, Saudi Arabia and South Africa have placed broader restrictions, while others have opted for a regional approach. RaboResearch describes the event as a “wake-up call” for Brazil and significant importing nations.

Experts predict that with the advance of winter, risks will emerge in the Northern Hemisphere 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.”

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