The latest poultry report from Rabobank suggests global poultry demand and trade will remain strong this year. The firm forecasts an average global growth of 2% for poultry meat in 2022. However, the industry will face challenges related to historic high-cost inflation and logistic disruptions, which will especially impact low income countries.

According to the report, the availability and cost of labor has become a big issue in many countries. Further, logistics has become more complex, on limited reefer availability and high costs. High steel costs, expensive labor and worries about higher interest rates are slowing greenfield investment and will reduce supply growth, the firm noted.

On the production side, Rabobank forecasts feed commodity cost during the first half of 2022 will rise by 5% as demand is expected to stay strong and stock levels of wheat, corn and soybeans will stay low.

“Global poultry industries need a sharp focus on operations to offset higher costs and supply challenges. Optimal procurement, product efficiency, and feed formulation will be vital,” the firm said.

In most regions around the globe, poultry supply is relatively tight and prices are strong. The war in Ukraine has led to an increase of 20-40% in global grain prices, and the poultry industry will be challenged to pass on all of these higher costs to consumers. “This will likely be possible in developed markets with high purchasing power, where supply is relatively tight, such as Europe, the U.S., and Japan,” explained Nan-Dirk Mulder, senior analyst of Animal Protein at Rabobank and report author.

However, there are rising concerns in developing countries. These sharply rising costs, together with lower purchasing power due to weaker growth and cost inflation, could challenge local food and poultry consumption, and potentially lead to regional crisis situations.

Strong trade challenged by costs, logistic disruptions

Global poultry trade is expected to remain strong this year, following increasing foodservice demand, the report noted.

“Brazil, China, and Turkey are well-positioned to benefit from this situation and take over some share of exports from the EU and war-affected Ukraine,” said Mulder.

Although Russia will be affected by sanctions, it could selectively benefit from its very competitive position.

Overall, global trade will be challenged by the ongoing inflation of transport costs as well as disruptions to logistics.

While avian influenza (AI) will remain a key challenge, Rabobank said the pressure should ease in the northern hemisphere summer. From a global perspective, AI cases in regions like Europe will disrupt trade in hatching eggs, which could impact supply in importing countries, as occurred in 2020 and 2021.

Modest growth for U.S.

Rabobank expects a modest 0.2% rise in ready-to-cook chicken production in 2021 but a 2.4% year-over-year rise in 2022.

“Our outlook reflects modest expansion in the breeding flock, some improvement in hatchability, and gradual stabilization and growth in weekly chick placements vs. the prior year,” noted Mulder.

The production increase is likely in response to a strong improvement in chicken prices and the outlook for continued demand strength, despite ongoing labor constraints at plants, he added.

U.S. exports also remain robust, the report relayed. Year-to-date volumes are 1% higher year over year, but volume is 25% higher year over year. While volumes to China are lower, volumes to Mexico, Cuba and the Philippines will remain strong, Rabobank said.