The outlook for the global poultry industry in 2017 has been shaken up by a sharp increase in the number of human avian influenza cases in China. It has dramatically changed Chinese market conditions, as prices have fallen sharply to historic lows. The avian influenza situation has significant implications, both locally and globally, according to the RaboResearch report "Global Poultry Quarterly for Q1 2017."
Avian influenza has also been spreading over other parts of the world, including Europe, Africa and the rest of Asia, but its impact on markets has been relatively low there, with most industries still performing relatively well.
“After a sharp increase in the number of human (avian influenza) cases in China, fears are rising over human-to-human cases with a risk of a pandemic, but no signs of such cases have been found so far,” Rabobank reported. In fact, the bank said the economic impact of the human avian influenza cases is big, with decreasing live broiler prices (down 50% compared to early in the third quarter of 2016) and a slowdown in import growth. Consumers have moved away from wet markets, which usually sell more than half of all poultry.
“The global impact of avian influenza on trade is significant, with ongoing restrictions on trade from Europe and also still from the U.S.,” according to RaboResearch senior animal protein analyst Nan-Dirk Mulder. China's recent cases of human avian influenza "dramatically turned Chinese market conditions, especially at wet markets, and this will indirectly reduce the appetite for poultry imports in the coming months," Mulder added. "This will affect global markets for wings, feet and legs — especially Brazil, which is a major exporter to China. Markets, including China, will gradually recover after the Northern Hemisphere winter season, when avian influenza pressure will likely be reduced.”
The report noted that markets with a domestic focus are still performing well, including some markets with avian influenza outbreaks, such as India, Russia, the European Union and Ukraine. Supply tends to be tight, and many markets are benefiting from lower feed costs, especially in Russia, Brazil, South Africa and India, the bank added.
“The new global avian influenza crisis provides another wake-up call,” Mulder said. “It will force the industry and governments to further modernize business models, as the virus will remain endemic in wild bird populations. Optimal biosecurity, modern value chain and distribution models and regionalization will be key themes.”